The Cancellation Tango
What a difference a few quarters make. During the first quarter of 2006, the U.S. economy posted a 5.6% year-over-year increase in real gross domestic product (GDP), a pace typically seen in the early stages of an economic recovery, not four years into a mature expansion. Consumer spending rose 4.8%, while non-residential construction (offices, hotels, highways) exploded with a 15.6% gain. In addition, exports surged 14%, dwarfing the 9% advance in imports. And even though the Federal Reserve was not finished raising short-term interest rates, headline and core inflation were rising at a modest 2.2% and 2.4% rate, respectively.
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