Soft GDP Won't Stop Fed Inflation Fight

Even though U.S. economic growth underperformed in the advance report for the first quarter, component measures suggest a future acceleration

The headline figure for the government's advance report on first-quarter gross domestic product (GDP)—an anemic 1.3% increase, the smallest in nearly four years—provided an unpleasant surprise for financial markets on Apr. 27. An eye-catching decline in a housing-sector measure in the release added to the gloom. But a closer look at the report shows upside surprises for measures of consumption and fixed investment that offer some good news for the 2007 growth outlook.

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