The Fed met earlier this week and announced that they plan to keep the brakes on the economy as they fear inflation worse than they do a slowing economy. But there was room in their statement for hope that a cut would come in 2007 noting a “mixed” economic performance and describing the year-long housing slump as “substantial.”

This economy continues to surprise analysts with its resilience in the face of circumstances that have crushed previous expansions. The government announced today that the unemployment rate fell to 4.4%, its lowest level since May 2001. The report also showed that service sector activity accelerated as housing declined.

Growth of the U.S.economy was less than half that of the first quarter, according to the Commerce Department in its first estimate of second-quarter Gross Domestic Product.  GDP increased at a seasonally adjusted 2.5% annual rate April, compared to 5.6% in the first quarter and also well below economists’ estimates of 3.2%.