US Economy Rocketed 4.8% in Q1 2006

02 May 2006

    WASHINGTON - The US economy leapt ahead during the first quarter of 2006, growing at its fastest pace in two and a half years, reports the Commerce Department.
    Gross domestic product, heavily boosted by government spending in the aftermath of the Gulf Coast hurricanes last year, grew at a 4.8% annual rate, more than double the 1.7% recorded in the last quarter of 2005.
    Talking down inflation fears, the Federal Reserve chairman Ben S Bernanke said he expected growth to slow to a more sustainable level.
    But it will need more than talk to reverse the inflationary effects of the huge US trade deficit, opines University of Maryland economist Peter Morici: "With crude oil prices soaring and China investing in new export capacity at a breakneck pace, the trade deficit will continue to pull down US growth.
    "Without a devaluation of the dollar against the Chinese yuan, US growth will slow significantly in the second half of this year."