The first-quarter growth rate of the nation’s gross domestic product was downgraded from a preliminary estimate of 1.3% to just 0.6%, the worst showing in more than four years, the Commerce Department said May 31. The foreign trade deficit was largely blamed for stunting growth.

Employers, however, did their part for the economy, adding 157,000 jobs to their payrolls in May, the Labor Department reported June 1. Economists had forecast growth of 135,000 jobs.

Personal income slipped 0.1% in April from March, the first drop in two years, the Commerce Department said June 1. The decline follows the pay-out of unusually large Wall Street bonuses and corporate stock options in the first quarter of 2007. Analysts expected personal income to rise 0.3%.

Although personal income dipped, consumer spending — a key ingredient to a healthy economy — rose a strong 0.5% in April, ahead of analysts’ forecast of 0.4%, the Commerce Department reported June 1.

Manufacturing output also rose, as the Institute for Supply Management said its manufacturing index in May climbed to 55, above April’s 54.7 reading and higher than the market expectation of 54. A reading above 50 indicates growth.

Consumer confidence increased as well, with The Conference Board, a private research group, reporting that its index of consumer confidence for May moved to 108 from 106.3 in April. Economists had expected a reading of 105.

For the week, mortgage rates on fixed-rate products rose again, Freddie Mac said May 31.

Existing home sales in April fell to a 5.99 million-unit annual pace, a 2.6% decrease from March’s rate, the lowest level since June 2003, the National Association of Realtors said May 25. Economists had expected a slight rise in home resales. The inventory of homes for sale grew 10.4% to 4.2 million units, which represents an 8.4 months’ supply at the current sales pace.

New home sales in April, however, rose to an annual pace of 981,000 units, up 16.2% from March’s rate, the sharpest climb in 14 years. The median price of a new home sold in April fell 10.9% from a year earlier to $229,100, the sharpest year-over-year drop in median new home prices since December 1970. Taken together, the sales surge and price decline indicate that builders are taking extraordinary steps to sell inventories of new homes.

For the week ended May 24, rates on 30-year, fixed-rate loans increased on upbeat consumer confidence and speculation that the Federal Reserve would not cut interest rates anytime soon.

Meanwhile, orders for durable goods — big-ticket items expected to last three or more years — increased 0.6% in April, slightly ahead of March’s 0.5% pace, the Commerce Department said May 24. The increase fell short of Wall Street’s expectation for a 0.9% rise.

Jobless claims rose 15,000 to 311,000 for the week ended May 19, in line with analysts’ forecasts, the Labor Department said May 24.

This week look for updates on consumer confidence on May 29 and the unemployment rate on June 1.

The Consumer Price Index (CPI), which measures inflation at the retail level, rose 0.4% in April, compared with a 0.5% rise in March, the Commerce Department reported May 15. Economists had forecast a 0.6% increase. The more closely watched core CPI, which strips out volatile food and energy prices, rose 0.2%, after a 0.1% gain in March. While core CPI edged up in April, the 12-month core CPI average declined to a 2.3% rise, the lowest rate since April 2006.

Industrial production jumped a bigger-than-expected 0.7% in April, the Federal Reserve said May 16. Analysts expected production to rise only 0.3%. April’s rise, paced by gains in auto and high-tech manufacturing, was only the third increase in the last eight months.

The Conference Board’s Index of Leading Indicators — a key gauge of future economic growth — slipped 0.5% in April, greater than the 0.1% decline analysts had predicted. Of the 10 indicators, only stock prices and the money supply (the total amount of currency and checkable deposits in circulation, which influences interest rates) moved in a positive direction.

Housing starts unexpectedly rose 2.5% in April, confounding analysts who had forecast a 2.2% drop, the Commerce Department reported May 16. But applications for building permits plunged 8.9% in April, the sharpest fall in 17 years.

Americans filed 5,000 fewer jobless claims for the week ended May 12, the Labor Department said May 17. Economists expected a slight rise. Meanwhile, mortgage rates for the week ended May 16 nudged up on lingering Federal Reserve concerns about inflation.

The Producer Price Index (PPI), which measures the price of goods at the wholesale level, rose 0.7% last month, down from a 1% gain in March, the Labor Department reported May 11. But the more closely watched core PPI, which strips out volatile food and energy prices, showed no rise after also remaining unchanged in March. Economists had forecast a 0.2% percent rise in core PPI.

The Federal Reserve kept the federal funds rate, an overnight bank lending rate that affects credit card, home equity and other loan rates, at 5.25%. In its statement, May 9, the Fed noted that “the predominant policy concern remains the risk that inflation will fail to moderate as expected.”

Retail sales unexpectedly fell 0.2% in April, hurt by rising gasoline prices and a sluggish housing market. Economists had forecast a 0.4% increase.

The U.S. trade deficit widened more than expected in March to $63.9 billion, as higher oil prices helped push total imports to the second highest level on record, the Commerce Department reported May 10. The trade gap swelled 10.4% from February, surprising Wall Street economists who had pegged the trade gap at $60 billion.

The Mortgage Bankers Association’s index of mortgage applications increased 3.6% for the week ended May 4, the third consecutive week the MBA’s applications index has risen. Meanwhile, Freddie Mac reported that mortgage rates on 30-year terms eased slightly for the week ended May 11.