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July 30, 2010    

World’s largest economy expands by 2.4% in Q2

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by Kay Murchie

Official figures have revealed the world’s largest economy experienced annualised growth of 2.4% in the April to June period, according to the US Commerce Department.

The figure came in slightly below expectations but it is the first of three estimates and could be revised up or down in the next few months.

However, the growth has slowed after an annual rate of upwardly revised 3.7% in the first quarter of the year.

The US economy has now grown for four consecutive quarters.

There have been fears about the strength of the US economic recovery, particularly as the country continues to grapple with high unemployment.

Higher unemployment and a slowdown in manufacturing have sparked fears of a “double-dip” recession in the world’s largest economy.

Commenting on the data, Nigel Gault, chief US economist at IHS Global Insight, said: “The economy entered the second quarter with plenty of momentum, but exited with very little.”

Of particular concern is the housing market, which has been suffering since a Government tax incentive expired at the end of April.

The end of the Government’s tax credit initiative, which provided up to $8,000 for new buyers and $6,500 for current owners who buy and move into another home, has boosted the housing market over the last few months.

However, as the effect of the tax credit continues to fade over the next few months, sales and activity are expected to dwindle, according to experts.

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