The United States economy expanded at an annual rate of 0.6% in the first quarter of 2008, exceeding analyst expectations of an annualized growth rate of 0.2%.
The GDP gain was above forecast and matched the rate of the previous three months (0.58%), the Commerce Department reported Wednesday in Washington. The last time the US economy grew less was in the fourth quarter of 2002. Spending by households, a key driver of the US economy grew last quarter at 1%, the slowest pace since 2001, --when the US was in a recession--, as job losses mounted, food and fuel prices surged and home values tumbled. Consumer spending growth in the fourth quarter of last year was 2.3%. Companies also retreated: business fixed investment, which includes spending on commercial construction and equipment and software, dropped at a 2.5% annual rate, the biggest decline since the first three months of 2004, after increasing 6% the prior quarter. Spending on new equipment and software fell at a 0.7% rate. Investment in residential construction projects fell at an annual rate of 27%, the most since 1981. The drop took away 1.23 percentage points from GDP, after a 1.25% drag in the prior quarter. Companies added to stockpiles at a 1.8 billion US dollar annual rate, after an annualized decline of 18.3 billion in the final three months of 2007. The figures added 0.8 percentage point to growth. The buildup may give way to cutbacks in production in coming months as businesses try to clear unwanted stockpiles. However on the bright side an improvement in international trade continued to contribute to economic growth. The trade deficit narrowed to an annual pace of 495.9 billion last quarter from 503.2 billion. The smaller gap added 0.2% to growth, after a 1% boost the prior quarter. US exports rose by 5.5% and imports increased 2.5%. In the fourth quarter exports were 6.5% higher and imports fell by 1.4%.
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