Bloomberg News
WASHINGTON - The unprecedented U.S. economic expansion remains robust, according to data released Thursday.
The government unexpectedly left unchanged its estimate that the U.S. gross domestic product grew at 5.4% in the first three months of the year, the third quarter in a row in which the economy has grown faster than 5%. The fourth-quarter GDP rose 7.3%.
"We have roaring demand, and until we see some hint of a softening in employment growth, we are not looking for the economy to slow a lot in the second quarter," said Suzanne Rizzo, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. Analysts expected first-quarter growth to be revised to a 5.2% pace in the second of three estimates the Commerce Department makes as more data becomes available.
Separate figures from the Labor Department indicated first-time claims for state unemployment benefits rose 6,000 to 284,000 last week. That followed a 20,000-claim drop the week earlier and left the average for claims this year at 278,000, down from last year's average of 298,000.
After-tax corporate profits, reported for the first time Thursday, rose 4% in the first quarter after rising 2.7% during the fourth quarter, according to the Commerce Department's statistics. The first-quarter gain was the largest since a 7.4% increase in the first quarter of last year.
Consumer spending rose at a 7.5% annual rate, slower than the 8.3% gain first estimated. Still, the increase is the fastest since third-quarter 1985, when spending also rose at a 7.5% rate. "Consumers are spending money like it's going out of style," said David Wyss, an economist at Standard & Poor's DRI in Lexington, Mass.
A report from the National Association of Realtors indicated consumer spending is likely to drive the economy in the months ahead. Though previously owned home sales fell 6.2% in April, the annualized rate of 4.88 million units means "solid spending for the next few months as people furnish their homes," said Carl Tannenbaum, chief U.S. economist for ABN Amro North America in Chicago.
