WASHINGTON DC: Despite America's bad debt turmoil, the US economy grew a better-than-forecast 4% in the second quarter, according to latest figures from the Commerce Department.

The expected annual growth rate for the quarter had been 3.4%. The surprise increase was driven by robust export figures and stronger corporate investment.

However, analysts believe the sub-prime panic will affect growth for the rest of the year as banks and borrowers face tougher conditions.

"Unfortunately, beginning in early August, there was a significant tightening of mortgage credit that might further slow home buying and put downward pressure on home prices to the detriment of consumer spending," warns economist John Lonski at Moody's Investors Service.

Data sourced from BBC Online; additional content by WARC staff