Washington, DC, May 25, 2006--The economy grew at a 5.3% annual rate in the first quarter, the Commerce Department said Thursday in its first revision of gross domestic product estimates.
A month ago, the government agency estimated real (inflation-adjusted) growth in the period January through March at an annualized 4.8%.
The upward revision was not as large as expected. Economists were expecting an upward revision to 5.6%. It remains the fastest growth since the third quarter of 2000. The economy grew at a 1.7% rate in the fourth quarter, slowed by the effects of Hurricane Katrina. The economy has averaged a 3.6% growth rate in the past four quarters.
The upward revision was largely due to higher inventory investment and a lower trade deficit than the government had initially estimated.
Commerce said that lower consumer spending on services and weaker investment in equipment and software offset some of the upward revision.
In the first quarter, corporate profits rose 7.9% after rising 14.4% in the fourth quarter. Corporate profits are up 23.8% on a year on year basis, the largest increase since the third quarter of 2002.
The inflation picture was unchanged.
The core personal consumption expenditure price index rose at a 2.0% annual rate in the period, unrevised from the initial estimate last month.
All consumer prices, including food and energy, also rose at a 2.0% rate,
In current-dollar terms, GDP was estimated at an annual rate of $13.037 trillion up 8.8% from the fourth quarter.
Real final sales increased 5.5% in the quarter, up slightly from the intial estimate of a 5.4% rise.
Consumer spending increased 5.2% in the first quarter, contributed about 3.6 percentage points of the 5.3% increase in GDP. Spending on durable goods increased 5.2% while spending on nondurable goods increased 20.5% and spending on services rose 5.7%.
Business investment increased at a 9.3 pace, contributing 1.6 percentage points to growth.
Investments in equipment and software rose 13.8% in the first quarter, down from the initial estimate of a 16.4% gain.
Investments in residences increased 3.1% in the first quarter.
Inventories increased by $32.3 billion, revised up from $21.9 billion, subtracting 0.14 percentage points from growth.
Exports were revised higher to 14.7% rise, compared with the initial estimate of a 12.7% gain. Imports were cut to 12.8% rise, down slightly from the initial estimate of a 13% gain. As a result, net exports subtracting about 0.55 percentage points from growth, down from the initial estimate of .84 percentage points.
