U.S. First Quarter Growth Rate Revised Up to 5.6%

The Commerce Department said Thursday that economic growth in the first quarter of 2006 came in at an annual rate of 5.6% rather than the 5.3% initially reported last month. The revision was a bit higher that expectations; analysts had predicted a revised rate of 5.5%

The 5.6% growth rate is the highest for a quarter in nearly three years, and came off of a rather lackluster 1.7% growth rate for the fourth quarter of 2005. For the past 12 months, the economy has grown at a 3.7% rate.

The best news, however, was that the inflation rate was revised lower, taking some pressure off of the Fed as they meet to discuss interest rates. While an interest rate increase announcement today is a forgone conclusion, the slower inflation could signal a possible end to the Fed?s rate-raising policies.

Economists expect economic growth to slow for the remainder of the year, with most expecting a growth rate of around 3% at least until early 2007.