The US Bureau of Economic Analysis (BEA) released its first estimate on Thursday, revealing that the economy expanded at a 2.9% annualized rate in the fourth quarter.
This was slightly higher than the market expectation of 2.6% and followed the 3.2% growth recorded in the previous quarter.
The BEA attributed the increase in real GDP to a variety of factors, including an increase in private inventory investment, consumer spending, and government spending.
"The increase in real GDP reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and exports,"the BEA said.
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"Imports, which are a subtraction in the calculation of GDP, decreased," it added.
The US dollar strengthened against its rivals and the US Dollar Index turned positive after the release, while the benchmark 10-year US Treasury bond yield rose 2% on the day.
GDP Annualized is an important measure of a country's economic growth and is closely watched by investors and market analysts. A high reading is typically seen as positive for equities.