The economy cooled in the 1st quarter, with annualized growth in the inflation-adjusted (real) gross domestic product (GDP) dipping to 0.6%, the weakest in more than four years. However, recent data on consumer and business investment spending, construction activity, and net exports all suggest improvements in final demand for goods and services. Measures of activity in the manufacturing and services sectors over the past two months also indicate a rebound of production relative to averages in the 1st quarter. Private forecasters expect growth to remain moderate in the near term as adjustments in the housing market continue, but also expect growth to accelerate to a more trend-like rate of close to 3.0% by year’s end. Real GDP has grown at a healthy average rate of 2.9% over the past 22 consecutive quarters of expansion. Employment has also continued to expand; over 8 million new payroll jobs have been created in the past 45 months of consecutive job gains.