The U.S. economy jumped at an upwardly revised 5.3 percent annual rate in the first quarter of the year, the fastest growth in more than two-and-a-half years, as exports strengthened and companies built up inventories, the Commerce Department said on Thursday. First-quarter gross domestic product (GDP) growth was even stronger than the 4.8 percent annual rate first estimated a month ago, and more than triple the 1.7 percent annual rate recorded in last year's fourth quarter. The January-March surge in GDP—the largest since a 7.2 percent jump in the third quarter of 2003—was partly fueled by rebuilding in the hurricane-hit Gulf coast region. Growth is widely forecast to level off in coming quarters to a range of between 3 percent and 4 percent. Consumers and businesses regained their appetite for spending and investing the in the first quarter, a major factor underpinning the strong pace of growth recorded in the overall economy. Consumers increased their spending in the quarter at by a 5.2 percent pace, the strongest since the third quarter of 2003. Business spending on equipment and software increased at a 13.8 percent pace in the quarter, the best showing since the third quarter of 2004. Prices remained contained, with an inflation gauge closely watched by the Federal Reserve showing that core prices—which exclude energy and food—rose 2 percent in the first quarter, compared to a 2.4 percent rise in the fourth quarter of 2005. Meanwhile, the Labor Department reported that new applications for jobless benefits last week fell by 40,000 to 329,000 as the end of a partial government shutdown in Puerto Rico took people off the unemployment lists. The four-week moving average of jobless claims, which smoothes weekly volatility to provide a better picture of labor-market trends, rose by 3,250 to 337,000, its highest level since last October, when it reached 339,000. The total number of Americans who continued to collect jobless benefits rose 38,000 to 2.42 million last week.
