The US economy grew at its strongest rate in more than two years during the first quarter of 2006 on strong spending and investment, according to the Commerce Department.
Gross domestic product grew at an annual rate of 4.8% in the January-March first quarter, more than twice the 1.7% rate in the fourth quarter and the strongest for any three months since 7.2% in the third quarter of 2003.
The first-quarter figure was only slightly below the 4.9% rate that Wall Street economists had forecast.
A gauge of personal spending excluding food and energy - an inflation measure favoured by the Federal Reserve - advanced at a 2% rate in the first quarter compared with 2.4% in the fourth quarter last year.
Separately, the Labor Department said employment costs that measure what employers pay in wages and benefits rose at the slowest pace in seven years during the first quarter, which should temper concerns about potential wage-induced inflation.
First-quarter GDP performance was boosted by increased government spending on reconstruction in the wake of last year's devastating hurricanes on the Gulf Coast. Federal government spending shot up at a 10.8% rate, a sharp contrast to the 2.6% rate of decline in the fourth quarter.
Federal Reserve Chairman Ben Bernanke told the Joint Economic Committee on Thursday that growth was likely to moderate as the year wears on, partly because of some softness in housing markets.
He also indicated that U.S. central bank policy-makers might pause fairly soon in a campaign of steady rate rises, which have brought 15 interest-rate hikes since mid-2004.
