Figures this afternoon show that the US economy shot forward at an upwardly revised 5.3% annual rate in the first quarter of 2006, the fastest growth since the third quarter of 2003. The initial estimate was 4.8%.
Q1 growth in gross domestic product (GDP) was more than triple the 1.7% annual rate recorded in last year's fourth quarter, though still slightly below Wall Street economists' forecasts for a 5.7% pace.
Prices remained in check, with the core personal consumption expenditures price index that the Federal Reserve favours rising by 2%, compared with 2.4% in the fourth quarter.
The first-quarter surge in GDP was partly fuelled by rebuilding in the hurricane-battered Gulf Coast region. Growth is widely forecast to level off in coming quarters to a range of between 3% and 4%.
A sharper build-up in inventories than previously thought during the first three months of 2006 accounted for much of the upward revision in growth. In addition, exports were stronger than originally reported, rising at a 14.7% annual rate rather than 12.1%.
This was the second reading of economic growth for the first three months of the year. The government revises the data twice after each initial estimate and its final tally of first-quarter performance will not be available for another month.
Somewhat surprisingly, spending on housing was moderately stronger than had been initially thought, growing at a revised 3.1% rate instead of 2.6% estimated a month ago. Fed Chairman Ben Bernanke told Congress last month that one of the reasons economic growth was likely to moderate in coming months was that housing markets were showing signs of softening.
Personal consumption spending, which fuels two-thirds of national economic activity, grew at a 5.2% annual rate in the first quarter, down from the 5.5% reported a month ago.
