Growth will accelerate around the world in coming months, as a faster-than-expected rebound in the US lifts economies in Europe and Asia, economists and executives said.
"The worst is behind us and we are in the phase of recovery," said Dieter Zetsche, chief executive of DaimlerChrysler AG's Chrysler Group.
The US is projected to grow at a 3 percent annual rate in the coming quarter, after expanding at a 4.1 percent pace in the first three months of the year, according to a Bloomberg News survey of 36 economists.
Following a 1.4 percent growth rate during the fourth quarter, that would mean the world's largest economy endured the ``mildest recession in US history,'' said Philadelphia Federal Reserve Bank President Anthony Santomero. From the time the recession began last March, US gross domestic product declined in only one quarter, at a 1.3 percent pace between July and September.
The US added 66,000 jobs in February, the first increase in seven months, and the unemployment rate unexpectedly fell to 5.5 percent. The good news on jobs gave a boost to consumer confidence, which paid off in increased retail sales.
Wal-Mart Stores Inc, the world's largest retailer, said last week that fiscal first-quarter sales at stores open at least a year will be at the upper end of forecasts of an increase of 5 percent to 7 percent.
On Tuesday, Fed policy makers dropped their 15-month view that weak growth is the biggest risk facing the US economy, and the resurgence has investors anticipating the central bank will by midyear increase the benchmark overnight bank lending rate from a 40-year low of 1.75 percent.
The implied yield on the fed funds futures contract for June, tied to expectations for the Fed's May 7 meeting, is 2.01 percent, a quarter percentage point above the current rate.
A revitalized US is proving to be good news for the rest of the world. Europe is growing again after its economy contracted in the fourth quarter for the first time since 1993. Americans are the No. 1 investors on the continent.
"The US is enjoying a period of renewed growth," said Franco Arquati, chairman and chief executive officer of Italy's Arquati SpA, which makes household furnishings. "It's a very important market for us."
Confidence is rising among manufacturers in Germany, France and Italy, which account for more than 70 percent of the economy of the 12 countries that use the euro. French and Italian industrial production rose in January. Growth may reach as much as 2.5 percent in late 2002, according to the latest forecast from the European Central Bank.
"We have a recovery scenario that's pretty robust," ECB Vice President Christian Noyer said.
Companies from Spanish construction materials maker Uralita SA to Puma AG, Germany's second biggest sporting goods maker, have said they expect rising earnings as growth picks up.
While the pace of Europe's rebound is expected to lag the US, European interest rates are expected to rise. The ECB is likely to begin pushing up its main refinance rate from 3.25 percent by August, according to the median forecast of 22 economists surveyed by Bloomberg News.
Sweden's Riksbank last week became the first western central bank to raise interest rates this year, lifting its benchmark repurchase rate a quarter point to 4 percent. "This is the first of many," Nick Kounis, an economist at Fortis Bank in Amsterdam said. "The Bank of England could move in May, the Fed in June and the ECB at some point after," he said.