Washington, DC, June 29, 2006--The economy grew at a revised 5.6% annual rate in the first quarter, the fastest rate in nearly three years, the Commerce Department said Thursday in its final revision to gross domestic product estimates.
A month ago, the government said the economy grew at a 5.3% pace after a tepid 1.7% pace in the fourth quarter. Economists now expect growth to soften slightly to around 3% for the next few quarters, close to the economy's long-run non-inflationary speed limit.
While real growth was a bit faster than the expected 5.5% revision, inflation was revised lower, taking some of the pressure off the Federal Reserve, which meets later Thursday to discuss a 17th straight interest rate hike. As in earlier estimates, first-quarter growth was spurred by consumer spending, business investments in equipment and software, an improvement in the trade deficit, and higher federal government spending. Inventories subtracted from growth. Final sales rose 5.9%.
