Expansion continues apace

GDP Up 3.5 Percent; Jobless Claims Rise

Economic activity advanced at a solid 3.5 percent pace in the first quarter of the year, somewhat better than initially thought.

The latest reading on gross domestic product, released by the Commerce Department on Thursday, raised hopes that there is enough momentum to maintain economic expansion and job growth in the months ahead.

The new GDP figure represented an upgrade from the 3.1 percent annual growth rate first estimated for the January-to-March quarter. That pace, which had been the slowest in two years, had drawn concerns about the nation's economic strength.

"The upward revision shows that those concerns were somewhat exaggerated," said Lynn Reaser, chief economist at Banc of America Capital Management. "The soft patch appears to have been short and fleeting."

The higher estimate mostly reflected a slight improvement in the nation's trade deficit, which was less of a drag than previously thought. More brisk spending on housing also helped.

On Wall Street, the report lifted stocks. The Dow Jones industrials gained 79.80 points to close at 10,537.60, the best finish since April 7.

GDP measures the value of all goods and services produced within the United States.

While the 3.5 percent rate was better than the initial estimate, it was still down a bit from the 3.8 percent of the final quarter of 2004. High energy prices crimped spending by consumers and businesses in the first quarter.

However other economic data, including brisk retail sales, solid orders for big-ticket manufactured goods, surging home sales and a pickup in hiring, suggest that the economy snapped out of its funk in April.

In a separate report Thursday, the Labor Department said new claims for unemployment insurance rose by 1,000 to 323,000 last week. The level of claims still points to an improving job market, analysts said.[emphasis ours]

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Do ya love it? "Jobless Claims Rise" screams the headline ... Then ya get into the details and discover they rose by a paltry (and statistically irrelevant) 1000. If payroll jobs rose by 1000 (or 50,000) any given month, you'd read "Disappointing Jobs Report: The End is Near".

Anyhow, back in the real world, the expansion kicked into motion with the 2003 tax cuts continues at a solid pace, fueled by productivity growth and restrained from reaching loftier heights mainly by the odious Sarbanes-Oxley.

Thank Adam Smith that last November we were spared the Botoxed Gigolo and his tax hikes on the evil wealthy.

"I have a plan ... "