The eocnomy at the end of last year was stronger than first thought. The outlook for 2006 is even better.
Highlights of the latest report:
– Real gross domestic product was revised upward from an annual rate of 1.1 percent to 1.6 percent growth in the fourth quarter of 2005.
– The upward revision to the percentage change in real GDP reflects upward revisions principally to exports, federal government spending, equipment and software, and to change in private inventories that were somewhat offset by an upward revision to imports.
– Real GDP growth for all of 2005 was unchanged from the advanced estimate, remaining at an increase of 3.5 percent (from the 2004 annual level to the 2005 annual level).
– The Fed’s preferred measure of inflation, the PCE core deflator, was revised downward from the 2.2 percent annualized growth rate initially given in the advanced estimate to a 2.1 percent annualized growth rate in the fourth quarter of 2005.
Although the growth of GDP slowed in the fourth quarter of 2005, economists are already looking to the first quarter of 2006 for a large rebound. Forecasts for GDP growth during the first quarter of 2006 are ranging from as high as a 4.5 percent annual growth rate to a 4.1 percent annual growth rate. Expectations for the second half of 2006 are for a healthy yet slower rate than that of the beginning of the year. For the entire year of 2006, most forecasts are hovering around a strong 3.3 percent growth rate.
Here is the link to the Bureau of Economic Analysis report.
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