The federal government said the economy grew 0.9% in the first quarter in its second estimate of gross domestic product, a slight increase from its first read and in line with expectations.
GDP growth outpaced the 0.6% the Commerce Department's Bureau of Economic Analysis
in its advance estimate. Economists had forecast 0.9% growth.
GDP also grew 0.6% in the fourth quarter. The stronger growth in the first quarter is another argument against calls that the economy is in a recession, as traders increasingly expect the
to pause -- or even begin reversing -- its rate-cutting campaign commence after the credit crisis gripped markets last summer.
The Labor Department also reported 372,000 seasonally adjusted initial jobless claims for the week ended May 23. That's an increase of 4,000 from the previous week's revised figure of 368,000. The four-week moving average was 370,500, a decrease of 2,500 from the previous week's revised average of 373,000.
The small increase in first-quarter GDP reflected increased personal consumption expenditures for services, exports and services, federal government spending and private inventory investment, offset by residential fixed investment and personal consumption expenditures of durable goods. Imports, which weigh on GDP, decreased.
The second, or preliminary, estimate is not the government's final read of first-quarter GDP. A final revision will be made public next month.
The price index for gross domestic purchase, measuring the price U.S. consumers pay for goods and services, increased 3.5% in the first quarter. That's the same figure reported in the advance estimate and slightly lower than the 3.7% reported in the fourth quarter. Excluding the cost of food and energy, the price index rose 2.2%, vs. 2.3% in the fourth quarter.
Real exports increased 2.8% in the first quarter, vs. 6.5% in the fourth quarter. Imports, a drag on GDP, decreased 2.6%, vs. 1.4% in the fourth quarter.
Concerns remain in the ongoing housing slump and continued problems in consumer and commercial credit, evidenced Wednesday when most bank stocks slipped after
reported it expected higher-than-previously-expected charge-offs of loans to residential builders.
But the Fed's extraordinary moves in the wake of
stunning collapse in March seems to have stabilized markets and ushered the economy through its darkest hour during the crisis. The central bank brokered a deal in which
bought Bear for $10 a share, with the Fed guaranteeing $29 billion of the toppled brokerage's hardest-to-trade assets.
The Fed also introduced several new funding mechanisms for cashed strapped banks and brokerages, making direct lending to primary dealers, including
for the first time since the Great Depression.
The central bank also has slashed its key short-term interest rate target by 325 basis points since the outbreak of the credit crisis last summer.
This article was written by a staff member of TheStreet.com.