(RTTNews) - Indicating faster than previously expected economic growth, the Commerce Department released its final report on first quarter gross domestic product on Thursday, showing that the pace of GDP growth was upwardly revised compared to the previous estimate.

The report showed that the pace of GDP growth in the first quarter was upwardly revised to 1.0 percent from the 0.9 percent estimated last month. The final reading marks much stronger than expected growth than the advance estimate of 0.6 percent growth reported in April.

With the upward revision, the GDP growth in the quarter also marks a notable acceleration from the 0.6 percent growth seen in the fourth quarter.

The Commerce Department said that the upward revision compared to the preliminary estimate reflects upward revisions to exports, consumer spending, and equipment and software spending.

The upward revisions were partly offset by an upward revision to imports and a downward revision to private non-farm inventory investment.

Additionally, the Commerce Department said that the acceleration in the pace of first quarter GDP growth compared to the previous quarter primarily reflected an upturn in inventory investment that was partly offset by a deceleration in consumer spending.

The report showed that consumer spending increased by 1.1 percent in the first quarter, which is upwardly revised from the previous estimate of 1.0 percent but still marks a notable slowdown compared to the 2.3 percent growth seen in the fourth quarter.

The slowdown in the pace of consumer spending growth came as a 3.1 percent increase in spending on services was partly offset by a 6.0 percent decrease in spending on durable goods.

The Commerce Department also said that its closely watched reading on core consumer prices, which exclude food and energy prices, rose 2.3 percent in the first quarter following a 2.5 percent increase in the fourth quarter.

Including food and energy prices, consumer prices increased by 3.6 percent in the first three months of 2008 compared to a 3.9 percent increase in the last three months of 2007.

The upward revision to first quarter GDP growth is likely to further ease recent concerns about the possibility of a recession, which is typically defined as two consecutive quarters of negative GDP.

Easing recession fears may have played a role in Wednesday’s decision by the Federal Reserve to leave interest rates unchanged, ending a string of rate cuts aimed at stimulating the stagnant economy.

The Fed also indicated that it was turning its attention from supporting economic growth to fighting inflation, a move that opens the door for future rate hikes. In leaving rates unchanged, the central bank suggested that the threat to the economy has eased somewhat, while the danger of inflation has become more acute.

The central bank, led by Chairman Ben Bernanke, remains in a precarious position as it tries to battle rising prices while the economy continues to show signs of strain.

Following its regularly scheduled meeting, the Federal Open Market Committee, the policy-making arm of the U.S. central bank, announced that it has decided to leave its target for the federal funds rate at 2 percent.

This halted a series of rate cuts that began late last summer and took the Fed’s key rate from 5.25 percent last September to its current level of 2 percent - its lowest level since November of 2004.

Commenting on the decision, the central bank said in its policy statement, “Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.”

In other economic news, the Labor Department released its report on initial jobless claims in the week ended June 21st on Thursday, showing that weekly jobless claims came in unchanged compared to an upwardly revised reading for the previous week.

The report showed that jobless claims came in at 384,000, unchanged from the previous week’s revised figure of 384,000. Economists had expected jobless claims to slip to 375,000 from the previous week’s initial estimate of 381,000.

At the same time, the Labor Department said that the less volatile four-week moving average rose to 378,250 from the previous week’s revised average of 376,000.

The report also showed that continuing claims in the week ended June 14th rose to 3.139 million from the preceding week’s revised level of 3.057 million.

Earlier this month, the Labor Department raised some concerns about the strength of the labor market, with its monthly employment report showing that the unemployment rate jumped to 5.5 percent in May from 5.0 percent in April.

While economists had been expecting an increase in the unemployment rate, they had been expecting a much more modest increase to 5.1 percent.

Some economists may be looking ahead to the release of the Labor Department’s June employment report next Thursday. While the report is expected to show a decrease of about 50,000 jobs, the unemployment rate is expected to edge down to 5.4 percent.

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