WASHINGTON – U.S. economic growth leapt ahead at an upwardly revised 5.6 percent annual rate in the first quarter, helped by lower imports than first thought and generating strong corporate profits, the Commerce Department said on Thursday.
The department pushed its estimate of first-quarter growth in gross domestic product up from 5.3 percent that it reported a month ago.
That slightly exceeded Wall Street economists' predictions for a 5.5 percent rate and meant the economy expanded at more than triple the 1.7 percent pace recorded in last year's fourth quarter. It was the strongest quarterly growth in 2-1/2 years, since a 7.2 percent rate in the third quarter of 2003.
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The pace of economic growth is expected to moderate in coming quarters, partly because of some softening in the housing sector that analysts say will potentially have an impact on consumer spending, the key driver of U.S. economic performance.
Consumer spending in the first quarter advanced at a revised but still sizzling 5.1 percent rate rather than 5.2 percent estimated a month ago, far ahead of the 0.9 percent rate recorded in the fourth quarter.
The department said its main reason for revising first-quarter GDP upward was that imports were not as strong as it previously had calculated. Imports, which act as a drag on overall GDP, rose at a 10.7 percent annual rate in the first quarter rather than 12.8 percent.
Corporate profits also grew more strongly than the government previously thought, rising at a 13.8 percent annual rate after taxes instead of 8.8 percent it estimated a month ago. That matched the fourth quarter's rate of profits growth, which was the highest rate in four years.
There was little or no change in the data on prices, which remained in check. The core personal consumption expenditures price index that the Federal Reserve favors rose at a 2 percent rate, the same as estimated a month ago, compared with 2.4 percent in the fourth quarter.
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