The Commerce Department's Bureau of Economic Analysis this morning issued a revised estimate of first-quarter economic growth, raising the number from the 0.6% rate announced last month to 0.9%.
The upward revision, while signaling that the economy was at least still growing and not in recession, was still viewed as anemic by economists.Coupled with a 3.5% rise in the price index for gross domestic purchases, the growth in GDP fanned fears that inflation is creeping into the economy.
Excluding food and energy prices, the index for gross domestic purchases increased 2.2% in the quarter, compared with an increase of 2.3% in fourth quarter, 2007. The report provided fresh evidence that consumers are reining in spending: real personal consumption expenditures increased 1% in the first quarter compared with an increase of 2.3% in the fourth quarter of last year.
In the housing sector, real residential fixed investment decreased 25.5%, compared with a decrease of 25.2% percent in last year's fourth quarter.
The rise in GDP was due to positive contributions from personal consumption expenditures for services, exports of goods and services, federal government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment and PCE for durable goods. Imports, which are a subtraction in the calculation of GDP, decreased. Federal government spending was up 4.4%.
Separately, the Labor Department reported initial jobless claims increased by 4,000 to 372,000 last week, roughly in line with economists expectations.