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WASHINGTON (Reuters) – The U.S. frugalness concentrated measure in the ordinal lodge to acquire its pre-recession extreme with a bounteous acquire in consumer outlay and brawny exports, removing doubts about the recovery's sustainability.

The frugalness grew at a 3.2 proportionality annual evaluate in the test threesome months of 2010, after expanding at a 2.6 proportionality measure in the ordinal quarter, the Commerce Department said on Friday.

Wall Street had looked for a 3.5 proportionality gain, but the composition of ontogeny gave the inform a astonishingly robust tenor: brawny consumer and business spending, and a hint at a requirement for businesses to build up inventories.

Still, it was not seen as so brawny as to belt the agent Reserve soured road from efforts to hold recovery.

"The numbers countenance rattling good. The frugalness has got some actual beatific strength way into the newborn year," said Joseph LaVorgna, honcho U.S. economist at Deutsche Bank Securities in New York.

He said ontogeny could easily crowning 4 proportionality this year, if job creation eventually picks up. "If the fag mart does not become finished the frugalness is not feat to intend sufficiency lift."

Investors took little attending of the report, inattentive by semipolitical unrest in empire and weak joint results, including a precipitous fall in Ford Motor Corp's quarterly earnings.

Stocks fell, while prices for U.S. polity bonds rose. The disturbance in empire also helped near the dollar up against a goal of currencies as investors wanted a safe haven.

For the whole of 2010, U.S. large husbandly creation grew 2.9 percent, the large acquire since 2005 but an advance likewise weak to cut absent at unemployment, which ended the assemblage at 9.4 percent. Output shrunken 2.6 proportionality in 2009.

"I think there is such more certainty today that we've got a sustainable expansion," Treasury Secretary Timothy Geithner said at the World Economic Forum in Davos before the data was released.

But he cautioned: "It is not a boom. It's not feat to offer the prospect of a fast fall in the unemployment rate.

CONSUMERS SHOULDER RECOVERY

During the ordinal quarter, consumer outlay grew at a 4.4 proportionality evaluate -- the fastest since the prototypal threesome months 2006. Consumer spending, which accounts for more than two-thirds of U.S. scheme activity, added about 3 proportionality points to value growth, its largest contribution in more than quaternary years.

And consumers are growing more confident. The composer Reuters/University of Michigan's consumer view index rose to 74.2 from 72.7 primeval this month, a removed inform showed.

Though analysts do not wait consumer outlay to move rising at such a speed pace, they wait it to rest strong.

Indeed, Ford upraised its forecast for 2011 U.S. machine income to a arrange of 13 meg to 13.5 meg vehicles. It had previously said income could be as baritone as 12.5 million.

Another champion of ontogeny was exports. An 8.5 proportionality move in exports compounded with a 13.6 proportionality fall in imports to add 3.44 proportionality points to value growth, the prototypal contribution from change in a assemblage and the large since 1980.

World leaders are reckoning on stronger U.S. exports to help rebalance the global economy, and the Obama brass is targeting exports as a ontogeny engine.

But economists said the boost from change was probable to be fleeting as a requirement by businesses to build stocks would advance to a restorative in imports.

In the ordinal quarter, listing ontogeny slowed sharply to subtract from value ontogeny for the prototypal instance since the second lodge of 2009. Economists said businesses belike had underestimated the strength of obligation and would today requirement to restock, which should obligate boost gains in production.

"Consumer outlay is solid and it's probable to rest decent. That means we're belike feat to wager an listing build-up in the prototypal half of the year," said Neil Dutta, an economist at Bank of America Merrill Lynch in New York.

If businesses had not put the brake on listing growth, the frugalness would hit swollen at a 7.1 proportionality clip. That marks the large increase in husbandly and foreign obligation in more than 26 years. In contrast, husbandly purchases grew at a such more moderate 3.4 proportionality rate.

EMPLOYMENT STILL LAGGING

Even with ontogeny quickening, advancement reaction unemployment has been painfully slow, and the inform is little comfort for the millions of dismissed Americans, or for U.S. central slope officials on a jobs-creation vigil.

On Wednesday, FRS officials vocal anxiety the measure of the feat was still not brawny sufficiency to significantly lower unemployment and reiterated a commitment to a $600 1000000000 input try finished the acquire of polity bonds.

Although businesses hit been indecisive to hire, they hit utilised their vast change force for newborn investments and outlay on equipment and software notched a ordinal straightforward quarterly acquire at the modify of terminal year.

Home antiquity also helped hold growth, although it could be perceive primeval this assemblage by the disagreeable season defy blow some parts of the country. Government outlay contracted, with such of the inspire reaching from land and topical governments.

The inform showed inflation speed on a inflate in matter and fuel costs. But a "core" toll index closely watched by the FRS advanced at a record baritone 0.4 proportionality pace, suggesting panoptic toll pressures are not building.

(Editing by Andrea Ricci and Tim Ahmann)

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