Cross Timbers Business Report, Volume 19, Number 3, Spring 2006 Page: 1
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Cross Timbers Business Report
Published by the College of Business Administration, Tarleton State University
Articles by Members of Delta Mu Delta, William L. Beaty and Elizabeth Cowles, Editors
Volume 19, No.3
First Quarter Output Growth Rebounds
By Visente Arreola Jr.
Economic conditions took a turn for the better in
the first quarter of 2006, according to the most recent
output report from the Department of Commerce.
Real Gross Domestic Product (GDP), which measures
all goods and services produced in the economy rose
by 4.8 percent; this change is partly due to increased
consumer spending, which rose from .9 percent
growth in the fourth quarter of last year to 5.5 percent
increase in the first quarter of 2006. In last year's fi-
nal quarter, GDP was at one of its lowest points - an
anemic 1.7 percent growth rate.
One of the main reasons GDP recovered was due
to durable goods purchased by consumers - this figure
increased by 20.6 percent over the previous period.
This figure marked a nice turnaround when compared
to the 4th quarter of 2005 when this volatile spending
category decreased by 16.6 percent.
Investment saw an increase of 6.5 percent, partly
due to businesses spending on structures which rose
by 8.6 percent; equipment and software increased by
16.4 percent, and residential investment rose by 2.6
Once again the United States imported more than
it exported. Exports increased by 12.1 percent, but
imports increased by 13.0 percent.
Government spending added more fuel to output
expansion last quarter. Federal government expendi-
tures rose by 10.8 percent, but state and local outlays
Changes in Real GDP
Annual Percentage Rates
U1 UL U U4 1 UZ U U4 U1
2004 2005 2006
Source: Bureau of Economic Analysis, U. S. Department of Commerce
The Department of Commerce collects and re-
ports national output data on a quarterly basis. This
preliminary report will be revised twice before being
posted as a final estimate.
Visente Arreola Jr. is a senior majoring in account-
ing at Tarleton State University
Consumer Prices Move Moderately Higher in Early 2006
By Christine Kramer
In the last quarter of 2005, the nation experienced
a decline in its inflation rate, due to a 24.6 percent de-
crease in transportation prices. But in the first quarter
of 2006, inflation has made a comeback.
The Labor Department reported the nation's infla-
tion rate, as measured by the consumer price index
(CPI) averaged 3.4 percent in the first three months of
2006. This value is significantly above the 0.4 percent
rate noted in the last quarter of 2005 but is identical to
last year's overall inflation rate.
Not surprisingly, much of last quarter's price rise
is attributable to higher gasoline costs, which rose at
an annual rate of more than 40 percent.
With the use of the Bureau of Labor Statistics
Consumer Price Index calculator, $1,000 of real in-
come in 2005 had the same buying power as
$1,023.04 today. Quoting from the Bureau of Labor
Statistics, "The CPI inflation calculator uses the av-
erage Consumer Price Index for a given calendar
year. This data represents changes in prices of all
goods and services purchased for consumption by
urban households. This index value has been calcu-
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Tarleton State University. College of Business Administration. Cross Timbers Business Report, Volume 19, Number 3, Spring 2006, periodical, Spring 2006; Stephenville, Texas. (texashistory.unt.edu/ark:/67531/metapth284671/m1/1/: accessed November 23, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting Tarleton State University.