WASHINGTON, March 28: The US economy expanded 1.7 per cent in the fourth quarter of 2001, the government said Thursday, beating previous estimates and defying an official recession verdict.

“It’s an upward surprise,” said Sal Guatieri, Chicago-based economist with Bank of Montreal.

“The report is generally consistent with the view that this economy bounced out of recession late last year and now is advancing at a fairly solid clip in the first quarter.”

Annualised gross domestic product (GDP) growth in the October-December period had already been upgraded by the Commerce Department from a first estimate of 0.2 per cent to 1.4 per cent.

Economists said they were being forced to tear up their earlier cautious growth forecasts.

“We are looking now at annual growth of 3 per cent this year,” Guatieri said. “That is an estimate that has essentially doubled in the last couple of months on the back of the much stronger than expected numbers.”

The new figures showed trade was slightly stronger than first thought while consumer spending raced ahead 6.1 per cent, fuelled by special financing deals in car showrooms.—AFP