U.S. economy grew 1.8 percent during the first quarter

The U.S. economy grew at a slower pace than economists forecast during the first quarter of this year as consumers cut back on spending, home construction dropped and government purchases decreased, according to The Washington Post.

Gross domestic product increased at a 1.8 percent annual rate from January through March compared with a 3.1 percent rate during the last three months of 2010. Economists had projected 2 percent growth.

However, some economists still are optimistic.

"The disappointing first quarter will be short-lived, and the recovery will accelerate through the remainder of this year," says Ryan Sweet, a senior economist at Moody's Analytics Inc., West Chester, Pa.

A decrease in consumer spending during the first quarter most likely was prompted by higher gas prices. Household purchases, which account for about 70 percent of the economy, rose at a 2.7 percent rate during the first quarter compared with 4 percent during the last three months of 2010. Spending on automobiles slowed from a rate of 34.7 percent to 11.5 percent.

Government purchases fell at a 5.2 percent annual rate—the biggest drop since 1983—after falling 1.7 percent during the fourth quarter of 2010.

Additionally, residential construction fell at a 4.1 percent rate, and equipment and software grew at an 11.6 percent rate.

Date : 5/3/2011