The U.S. economy slowed as expected in the first quarter, but a weak pace of consumer spending and export growth than previously estimated could reduce the economic outlook for the current period, a government report showed Thursday. Gross domestic production (GDP) increased at a 1.9 percent annual rate, the Commerce Department said in its final reading, unchanged from its estimate last month. That was in line with economists' expectations. However, when measured from the income side, the economy grew at a 3.1 percent pace in the first quarter, up from 2.6 percent in the previous quarter. The slow first-quarter pace of GDP growth was a step-down from the fourth quarter's 3.0 percent rate. Consumer spending, which accounts for about 70 percent of U.S. economic activity, increased at a 2.5 percent rate in first quarter, rather than the previously reported 2.7 percent pace. Business inventories increased $54.4 billion, adding only 0.10 percentage points to GDP growth compared with 0.21 percentage points in the previous estimate. Excluding inventories, the economy grew at a revised 1.8 percent rate in the first quarter, rather than 1.7 percent and up from 1.1 percent in the fourth quarter. Exports grew at a 4.2 percent rate instead of 7.2 percent. Second-quarter growth is forecast around 2 percent, but with global demand cooling amid Europe's debt crisis and an uncertain fiscal policy path at home forcing households to be cautious, even that estimate might be too optimistic.
