US Economy Grows at 5.6% Pace in 1Q, Fastest in 2 1/2 Years

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 5.6% in the first quarter of 2006, according to final estimates released by the Bureau of Economic Analysis. In the fourth quarter of 2005, real GDP increased 1.7%. In the preliminary estimates, the increase in real GDP was 5.3%. 

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, equipment and software, and federal government spending. 

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.6% in the first quarter; this index increased 3.7% in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 3.0% in the first quarter, compared with an increase of 3.2% in the fourth. 
  • Real personal consumption expenditures increased 5.1% in the first quarter, compared with an increase of 0.9% in the fourth. 
  • Real nonresidential fixed investment increased 14.2%, compared with an increase of 4.5%. 
  • Equipment and software increased 14.8% percent, compared with an increase of 5.0%. 
  • Real residential fixed investment increased 3.3%, compared with an increase of 2.8%. 
  • Real exports of goods and services increased 14.7% in the first quarter, compared with an increase of 5.1% in the fourth. 
  • Real imports of goods and services increased 10.7%, compared with an increase of 12.1%.
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 8.9%, or $276.2 billion, in the first quarter to a level of $13,042.3 billion. In the fourth quarter, current-dollar GDP increased 5.2%. 

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $176.7 billion in the first quarter, according to revised estimates. In the fourth quarter, profits increased $185.8 billion.

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