Economic activity accelerated sharply in the United States at the beginning of this year. GDP rose by 1¼ per cent in the first quarter, to a level 3.8 per cent higher than a year earlier. This was the fastest quarterly growth for two years. The acceleration in growth was unexpected given that the present cyclical expansion has now lasted for over seven years. Private sector demand is still continuing to be supported by the sustained appreciation in equity prices over the past three years, and the appreciation of the dollar has helped to hold down the inflationary pressures that are being built up as the labour market begins to tighten. The unemployment rate fell to 4.3 per cent in April, the lowest rate since 1970.