The United States economy performed better than expected in the first quarter of 2008 having expanded 0.9% according to the latest data from the Commerce Department.
Some analysts argue that the US economy is already in recession (two successive quarterly contractions) but the latest figure was even higher than the 0.6% growth estimate for the Jan-March period. The announcement follows recent figures showing orders of durable goods to be healthier than expected. New orders for manufactured goods fell by 0.5% last month but this represented half the 1% decline that had been expected. Thursday's upward revision in GDP growth was driven by a fall in demand for imports and by healthy construction spending on commercial property. In contrast, spending on residential construction was down 25% compared with a year ago while consumer spending, which accounts for two-thirds of overall output, is now at its weakest level in seven years. But economists said they were encouraged by signs growth was more balanced than first thought, with exports up 2.8% over the period. Positive economic signs have been rare at a time when the US economy is suffering from a weak housing market, declining consumer confidence and a severe banking crisis. The US Federal Reserve has cut interest rates this year in an effort to stave off a recession while the Bush administration has given families tax rebates worth billions of dollars. But the impact of these measures on consumers' willingness to spend is not likely to be felt until later this year. The National Association of Business Economics is forecasting annualized growth of just 0.4% in the second quarter although it expects growth to pick up to 2.2% in the third quarter.