The U.S. economy is setting a torrid pace in the first three months of 2018, putting it on track to notch its best quarter since late 2009, a forecast model from the Atlanta Federal Reserve showed on Thursday.

Gross domestic product, the government's broadest economic gauge, is on track to grow at a 5.4 percent annualized rate in the first quarter, the Atlanta Fed's Nowcast model showed, shortly after the release of U.S. manufacturing and construction spending data.

The last time GDP reached that lofty level was in the fourth quarter of 2009, when it recorded a 5.6 percent increase as the economy was digging its way out of a recession and financial crisis.

The latest GDP estimate was higher than the 4.2 percent growth pace the Atlanta Fed calculated on Monday and the 3.2 percent growth the government reported for the last quarter of 2017.

Earlier on Thursday, the Institute for Supply Management said its index on national factory activity slipped less than expected to 59.1 in January from 59.3 in December. Separately, the Commerce Department said construction spending rose 0.8 percent to a record high of $1.25 trillion in December.

The Atlanta Fed's early GDP estimates, however, tend to be much higher than the official government readings and are subject to downward revisions from incoming data.

Still, the latest forecast reinforced the view that U.S. businesses and consumers are in good shape, which would allow the Federal Reserve to further raise interest rates in 2018.