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January 29th, 2010
04:11 PM ET

Financial Dispatch: Best economic growth in 6 years

Andrew Torgan
CNN Financial News Producer

Okay, maybe it really is time to pop the Champagne. The government says the U.S. economy grew at the fastest pace in more than six years during the fourth quarter of 2009.

The nation's gross domestic product, the broadest measure of economic activity, rose at a 5.7% annual rate in the quarter. That was much stronger than had been expected and provides another sign that an economic recovery is taking hold.

Much of the improvement was driven by a turnaround in inventories, the supply of goods that businesses hold in anticipation of sales. But consumers were essentially bystanders in the fourth quarter, as personal consumption grew at only a 2% annual rate in the period.

Consumer spending accounts for more than two-thirds of all economic activity in the United States.

Toyota says fix coming soon

As Toyota's accelerator pedal recall expands into Europe, the Japanese auto giant says it has a fix for cars there - and that one will be coming soon for drivers in the U.S.

A company spokesman says Toyota is very close to announcing a solution to the issue, but Toyota still needs to get regulatory approval for a proposed repair in the U.S. and in Europe before a fix can be made.

The recall is to correct a problem that could cause the gas pedal to stick over time. Toyota recalled 2.3 million vehicles in the U.S. for the problem this week, although no repair procedure had yet been put in place.

The gas pedal recall is separate from an earlier one, begun in November to fix a problem in which the gas pedal can become caught on the edge of the removable floor mat. The floor mat recall was recently expanded so that it now covers a total of 5.3 million vehicles.

Geithner defends bailout of AIG

A day after facing furious lawmakers on Capitol Hill, Treasury Secretary Tim Geithner told CNN on Thursday that he would forever "carry the burden" of the decision to bail out AIG but defended it as the government's only option.

AIG was on the brink of collapse in September 2008 when Geithner, then the president of the Federal Reserve Bank of New York, captained the troubled insurer's bailout.

"I'll carry the burden of those decisions forever, but I'm very proud and confident in the decisions we made," Geithner told CNN's Christine Romans. "The American people in the crisis got a very raw deal, but it would have been worse if their government let the financial system fail."

The rescue of AIG was controversial at the time and only more so today. The troubled insurer made risky bets on mortgages and was so interconnected with the rest of the financial sector that it became "too big to fail."

When the bottom fell out of the housing and financial markets in 2008, AIG required a $181 billion taxpayer-funded bailout to stay afloat - and keep the rest of the financial sector from sinking with it.

At a House Oversight Committee hearing on Wednesday, lawmakers on both sides of the aisle grilled Geithner about the most controversial aspect of the bailout: a decision to use taxpayer funds to make AIG's business partners whole.

Geithner said that he is aware of the criticism being rained down on him by lawmakers and the public, but he stands by his actions and by regulators' decisions to save the economy from collapse.

AIG reveals the full story

And today, AIG made public the complete details of the most controversial aspect of its $181 billion bailout: a decision to use taxpayer funds to make the troubled insurer's business partners whole.

Included in the filing at Sec.gov are nearly 200 lines of descriptions of contracts unintelligible to all but experts.

The decision to file a complete, unredacted report to regulators came after Rep. Darrell Issa (R-CA) leaked the document to the press following the AIG hearing on Wednesday.

Polls: Stimulus unpopular, but its uses have broad support

Finally, though the federal stimulus plan is unpopular, many Americans overwhelmingly support the basic provisions within the bill, a new national poll suggests.

Offered a range of options, about eight in ten people polled in a CNN/Opinion Research Corp. survey favored government spending on roads and bridges. A similar number favored using stimulus money to aid unemployed workers.

Seventy percent in the survey, released today, approved of spending some of the stimulus money on tax cuts, and sixty percent favored using the money to increase spending on mass transit projects.

While these options have support, another CNN/Opinion Research Corp. survey suggests respondents are displeased with who they believe the stimulus plan helped.

Fifty-four percent of Americans polled think the plan has helped bankers and investors, and only one-quarter think the stimulus plan has helped the middle class, according to the survey, released Wednesday.

Follow the money… on Twitter: @AndrewTorganCNN


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