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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (688442)	6/29/2005 4:06:35 PM
From: Bald Eagle	Read Replies (1) \| Respond to of 769670

Bad news for the hand wringing worry warts: GDP revised higher than expected All Reuters NewsWASHINGTON (Reuters) - Robust new-home building and stronger exports helped the U.S. economy expand at a faster-than-expected 3.8 percent annual rate in the first quarter, the Commerce Department said on Wednesday. The final figure topped Wall Street economists' forecasts for a 3.7 percent growth rate and added to expectations that the U.S. central bank will again raise short-term interest rates this week. A key inflation gauge in the report was revised a bit lower, and is expected to allow the Fed to continue what it calls a "measured" pace of rate increases. This marks the second time gross domestic product -- the broadest measure of total economic activity within U.S. borders -- has been revised higher for the first quarter and now it matches the rate posted in the closing quarter of 2004. Most forecasters say GDP will continue expanding at rates around 3.5 percent in coming quarters, despite some strain from costlier energy prices and slowing global growth. "We are not out of the woods with the economy," said economist Robert Brusca of Fact and Opinion Economics in New York. "The global economy is still up in the air depending on what oil prices will do." White House spokesman Scott McClellan said the GDP data showed the economy enjoying "solid and sustained growth and job creation," and urged House and Senate lawmakers to agree on proposals for boosting energy output. U.S. oil futures hit a record $60.95 a barrel on Monday, about $23 a barrel higher than a year earlier, but eased to just over $57 on Wednesday after crude inventories were reported higher. The Senate on Tuesday approved a bill with a variety of measures, including tax breaks and incentives to boost domestic energy production. FED BEGINS PONDERING The first-quarter GDP report was one of the final pieces of economic data that Federal Reserve policy-makers, who are scheduled to begin a two-day meeting on Wednesday afternoon to consider interest-rate strategy, will have as they move toward a widely predicted ninth straight rate increase on Thursday. Inflation remained well in check. A gauge favored by Federal Reserve Chairman Alan Greenspan -- the personal consumption expenditures index excluding food and energy -- advanced at a 2 percent annual rate instead of 2.2 percent estimated a month ago. That was only moderately ahead of the fourth quarter's 1.7 percent rate. The Fed began raising rates a year ago, pushing its trend-setting federal funds rate up in eight successive quarter-point increments from a 46-year low of 1 percent to a current level of 3 percent. So far it has given no indication that it is considering a halt to the rate-rise cycle. The first-quarter GDP data is relatively old and some analysts were skeptical about its predictive value. STILL SOME DOUBTERS There was scant market reaction to the GDP report, which essentially confirmed strength in consumer spending and steady investment at the beginning of the year. Stocks and bond prices were essentially unchanged at midday as traders awaited the Fed decision on Thursday. The sizzling home-building industry contributed to the upward revision in first-quarter growth. Residential spending climbed at an 11.5 percent rate instead of 8.8 percent estimated a month ago. That was more than three times the 3.4 percent growth rate posted in the fourth quarter of last year. In addition, exports grew at an 8.9 percent rate instead of 7.2 percent calculated a month ago - also nearly three times the 3.2 percent rate of increase in the final quarter of 2004. Despite the stronger economic performance, growth in corporate profits after taxes weakened from the fourth quarter. Commerce said profits grew at a revised 1.2 percent annual rate in the first quarter compared with the 1 percent rise originally reported, and slowing from the 12.5 percent in the final three months of 2004.