US economy expands at fastest pace in six years

US economic growth jumped in the fourth quarter. Bloomberg reports:

The U.S. economy expanded in the fourth quarter at the fastest pace in six years as factories cranked up assembly lines, indicating the recovery may be strong enough to be weaned from government support.

The 5.7 percent increase in gross domestic product at an annual rate reported by the Commerce Department in Washington today exceeded the 4.8 percent median forecast of economists surveyed by Bloomberg News...

The expansion is carrying into the new year, a report from the Institute for Supply Management-Chicago Inc. indicated today. The group said its business barometer climbed to 61.5, the highest level since November 2005, from 58.7 last month. Readings greater than 50 signal expansion.

A gauge of consumer confidence climbed in January to the highest level in two years. The Reuters/University of Michigan final index of consumer sentiment rose to 74.4 from December’s 72.5.

Earlier on Friday, reports showed that the Japanese economy also probably expanded in the fourth quarter. AFP/CNA reports:

Japan's economy showed fresh signs of recovery Friday as factory output picked up and unemployment fell slightly, but a drop in consumer prices highlighted that deflation remains a key threat...

As overseas demand has picked up, Japan's industrial output rose 2.2 per cent month-on-month in December, the 10th straight monthly rise, new data showed...

Japan's jobless rate fell to 5.1 per cent in December, improving by 0.1 percentage point from the previous month, against market expectations of a rise to 5.3 per cent, government data showed...

Core consumer prices fell 1.3 per cent in December from a year earlier, the 10th straight month of drops, government data showed.

Meanwhile, Friday's data on the euro area showed no sign of deflation although unemployment continued to creep up in December. From Bloomberg:

European inflation accelerated in January to the fastest in almost a year after cold weather pushed oil prices to a 15-month high.

Consumer prices in the 16-nation euro region rose 1 percent from a year earlier after increasing 0.9 percent in December, the European Union statistics office in Luxembourg said today. That’s the highest since February 2009. The region’s unemployment rate rose to 10 percent in December from a revised 9.9 percent in the previous month, it said in a separate report.

On the whole, the global economic environment has improved to an extent that central banks are confident enough to reverse monetary policies, the latest being India. From AFP/CNA:

India's central bank kept interest rates on hold Friday but moved to drain liquidity from the banking system in a bid to tame surging inflation without hurting economic recovery.

The Reserve Bank of India (RBI) boosted its cash reserve ratio -- the sum commercial banks keep on deposit -- by a higher-than-expected 75 basis points to 5.75 percent in what it said was a bid to tame "inflationary expectations."