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US Economy Grows Faster than Forecast - 2003-07-31

The U.S. economy is showing signs of renewed vigor, growing at a faster pace than many forecasters had anticipated.

The Commerce Department reports U.S. gross domestic product, or GDP, grew at an annual rate of 2.4 percent in the second quarter of this year. The figure was a marked improvement from the sluggish 1.4 percent registered in the first quarter, and the most robust growth since the third quarter of last year, when the economy expanded at a 4 percent annual rate.

The Commerce Department attributes the pickup to a substantial increase in U.S. defense spending, much of it to support the war in Iraq, as well as new spending by businesses and consumers.

Thursday's news also highlighted the U.S. labor market. Initial claims for unemployment benefits registered a third consecutive weekly decline, down by 3,000 to a five-month low of 388,000. Such declines are an indication that job-seekers are having more success finding work, and a further sign of renewed economic activity.

The gross domestic product, a measure of all goods and services produced within the United States, constitutes a broad indicator of economic performance.

The U.S. Federal Reserve has been attempting to spark such growth and guard against risks of deflation, cutting short-term interest rates to their lowest levels in more than four decades.