GDP for First Quarter Matches Previous Quarter

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The U.S. economy grew more than expected in the first quarter of the year. The Commerce Department reported a 3.8% annual growth rate, compared to the 3.5% that was estimated about a month ago.

Home construction has increased significantly, and the U.S. trade deficit has narrowed. Inflation went up at a slower pace than previously estimated by the government.

GDP for First Quarter Matches Previous Quarter

There was also a stronger amount of exporting than expected, which helped to boost the economy. The GDP growth rate of 3.8% is the same as it was in the last quarter of 2004. According to AP,

To keep the economy and inflation on an even keel, the Federal Reserve has boosted short-term interest rates eight times – each in quarter-point moves – since June 2004. Another bump-up is expected when the Fed wraps up a two-day meeting on Thursday.

An inflation gauge tied to the GDP report and closely monitored by the Fed showed prices – excluding food and energy – rising at a rate of 2 per cent in the first quarter. While that was slightly lower than the previous estimate of a 2.2 per cent rate for the quarter, it was up from the fourth quarter’s 1.7 per cent rate of increase.

Some economists believe that the news may all be downhill from here as oil prices remain high, and do nothing to help the speed at which the economy grows.

“Oil at $60 a barrel is a negative for the outlook,” said PNC Financial Services Group chief economist Stuart Hoffman. “It’s not going to halt economic growth, but it’s one of the things that’s slowing global economies.”

Estimates for economic growth for the current quarter range all the way from 2.6% to 3.8%. Estimates for the third quarter are between 2.7% and 3.5%.

Chris is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.

GDP for First Quarter Matches Previous Quarter
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