Rate of Growth Revised to 6.1%
The U.S. economy grew faster than expected at the beginning of this year and the labor market is improving, government reports showed Thursday.
Boosted in part by the first increase in business spending for equipment and computer software since the third quarter of 2000, gross domestic product--the broadest measure of goods and services produced within U.S. borders--grew at a revised 6.1% seasonally adjusted annual rate during the first three months of this year.
That was the fastest pace in more than two years and unexpectedly higher than an earlier estimate of 5.6%, the Commerce Department said in its final reading for the quarter.
Although it was not enough to reassure financial markets hit by accounting scandals, the number added to evidence that the shallow slump of last year was over.
The labor market, usually the last to pick up in the wake of a recession, now is showing signs of improvement with fewer workers last week signing up for jobless benefits, according to a separate report.
New claims for state unemployment insurance benefits--a rough guide to the pace of job layoffs-- dropped by 10,000 in the week ended June 22 to a seasonally adjusted 388,000, the Labor Department said.
It was the fourth straight week that these jobless claims were below the key 400,000 mark, a level viewed by economists as a sign of a lackluster labor market.
According to the Commerce Department’s GDP report, consumer spending, which fuels two-thirds of economic activity, grew at a 3.3% annual rate, up from the initial estimate of 3.2%.
Business spending--which Federal Reserve officials regard as crucial to sustainable economic expansion--declined during the first three months of the year but not as sharply as previous estimates. Business investment fell at a 6.2% annual rate, a smaller drop than the previously estimated 8.2% decrease.
In one bright light, spending on equipment and software was up 0.1%, the first gain since the third quarter of 2000.
The biggest surge in defense spending since 1967 also helped push up GDP growth during the quarter.
