Posted on 04/28/2006 6:49:07 AM PDT by libertarianPA
WASHINGTON (Reuters) - The U.S. economy grew at its strongest rate in 2-1/2 years during the first three months of this year, snapping back from a lackluster fourth quarter on a surge in spending and investment, a Commerce Department report on Friday showed.
Gross domestic product grew at a 4.8 percent annual rate in the January-March first quarter, more than twice the 1.7 percent rate in the fourth quarter and the strongest for any three months since 7.2 percent in the third quarter of 2003. The first-quarter figure was only slightly below the 4.9 percent rate that Wall Street economists had forecast.
The pace of price rises declined from the fourth quarter. A gauge of personal spending excluding food and energy - a measure favored by the Federal Reserve - advanced at a 2 percent rate in the first quarter compared with 2.4 percent in the fourth quarter last year.
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 percent rate, a sharp contrast to the 2.6 percent rate of decline in the fourth quarter. It was the strongest government spending since a 22.1 percent jump in the second quarter of 2003.
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.
Businesses robustly boosted their investment during the first quarter, with spending rising at a 14.3 percent annual rate. That was three times the 4.5 percent fourth-quarter increase and was the largest in nearly six years, since a 14.8 percent climb in the second quarter of 2000.
Spending on equipment and software alone increased at a 16.4 percent rate in the first quarter - the strongest in six years - after a 5 percent fourth-quarter rise. The strong spending implies that corporations remain optimistic about their sales prospects and are willing to make the investments to expand their businesses.
With demand strong, inventories grew at a slower rate in the first quarter. Stocks of unsold goods increased at a $21.9 billion rate, down from $37.9 billion in the final three months last year, leaving room for factories to keep churning out more goods as long as spending remains hearty.
Good for job-seekers, but gotta keep a closer eye on inflation.
Hooverville.
If not for the Iraq War Bush's polls would be in the 70's; despite Katrina...
It's too good to last.
bttt
High growth, low inflation, low unemployment.....and yet the media keeps telling the people how horrible it is. The media gave Clinton blowjobs over worse numbers than these.
Good for you! There it is in a nutshell.
As long as the government gets to report the GDP in U.S. dollars, and the ignorant keep letting them define inflation as rising prices, then everything will continue to look good forever.
Keep smiling everyone!
How should they report GDP?
and the ignorant keep letting them define inflation as rising prices
How do you define inflation?
This rate of growth also puts the lie to the phony polls that are gleefully reported in the media.
That you willie?
Ok...I'll bite. What should we report US GDP in? Euros?
Since when has inflation not meant less purchasing power of the dollar?
in•fla•tion
Pronunciation: (in-flā'shun), [key]
—n.
1. Econ.a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency (opposed to deflation).
Definition: Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.
You might be thinking of something other than 'inflation'. If you get a chance please share your thoughts.
Doggone it...beat me to it...
D*amn pesky customers. LOL
Didn't beat the street, Bush is a failure.
No, I'm not Willie.
Since when has inflation not meant less purchasing power of the dollar?"
Firstly; I am contending that our U.S.dollar has been inflated. Consequently; even the "rise in GDP" when reported in dollars is inflated as a result. Now if our beneficient government were to post real inflation numbers using a baseline from, say, 1900 or even earlier, then you would see a different picture. O.K., I'll say it; use gold as a measure.
Secondly; rising prices are a measure of inflation, not the definition of inflation. Inflation is the printing of currency beyond the amount of backing (say, gold, for instance),that is supposed to be backing the currency.
You're welcome.
So what's the amount of currency that should be printed now, with no gold backing?
I hear you say gold does not change in value but everything else does. 
Take milk for instance. Look how wild the price of milk has been changing over the past few decades relative to the stable value if gold.
How the heck is someone supposed to feed his family with an economy like that?
Dollars are stable and gold is goofy.
You have slightly mis-interpreted my earlier reply. Over the long term, gold actually is the more stable commodity. We probably can't find supporting graphs of the value of milk expressed in oz. of gold for the past two millenia, but overall, the value of gold has not changed in terms of human productivity.
For example; an ancient Roman citizen could purchase a nice suit of clothing for about one oz. of gold. Likewise, in the 1950's a man could purchase a nice suit of clothing for about the value of one oz. of gold. Similarly today a man can still purchase a nice suit of clothing for the equivalent value of one oz. of gold, even though the "price" of gold (in U.S. dollars) has "risen".
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