Thursday, May 25, 2006

Economy Grows in First Quarter

Emerging from a year-end rut, the economy dashed ahead in the opening quarter of this year at a 5.3 percent pace, the fastest in 2 1/2 years.

The new snapshot showed gross domestic product was even stronger during the January-to-March period than the 4.8 percent annual rate first estimated a month ago, the Commerce Department reported Thursday.

Gross domestic product measures the value of all goods and services produced within the United States and is considered the best barometer of the country's economic fitness.

The upgraded reading on GDP, based on more complete information, mostly reflected stronger U.S. exports and better inventory building by businesses.

Economists, however, were predicting an even bigger upgrade to the first-quarter reading. Before the release of the report they were forecasting economic growth to clock in at a 5.8 percent pace. Even though the revised figure fell short of that, it nonetheless made clear that the economy had snapped out of its end-of-year lull.

In the final quarter of 2005, the economy grew at a feeble 1.7 percent pace. Fallout from the Gulf Coast hurricanes, including high energy prices, prompted people and companies to tighten their belts.

Consumers and businesses regained their appetite for spending and investing in the first quarter, a major factor underpinning the brisk pace of growth logged for the overall economy.

Their appetite, though, was a tad less hearty than initially estimated.

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Economy Dashes Ahead at 5.3 Percent Pace

AP Economics Writer
Published May 25, 2006, 7:38 AM CDT

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