Growth in the US economy slows to 1.8%
- 28 April 2011
- From the section Business
US economic growth slowed in the first three months of 2011 to an annualised rate of 1.8%, corresponding to a 0.4% quarterly increase.
This compares with a revised annual growth rate of 3.1% in the previous quarter, official figures show.
US GDP is expressed as an annualised rate, or annual pace, which shows what the three months' economic activity would mean if it carried on for a year.
The figure is a first estimate, and could be revised either up or down.
Economic growth has been hampered by high energy prices which have weakened consumer spending.
Consumer spending fell to 2.7% from 4% in the previous quarter.
Analysts said that although the GDP data was disappointing, it was not unexpected after the federal government slashed defence spending and heavy winter weather delayed construction projects.
"It's very much in line with consensus. The underlying components were a little better than what I had expected. The biggest factor was weather. It hurt consumption and construction," said Stephen Stanley of Pierpont Securities.
"Energy also hurt consumption as well. Higher gasoline prices took a bigger bite out of people's budget."
On Wednesday, the Chairman of the Federal Reserve Ben Bernanke said that the struggling housing market would continue to weigh on the US economic recovery.
He pointed out that home building and commercial construction were both "very weak" in the first quarter.
The Federal Reserve has cut its economic growth forecast for this year, citing weaker growth for the first quarter.
However, Mr Bernanke also said that he believed the elements leading to weaker economic growth would lessen throughout the year.
"Most of the factors that account for the slower growth in the first quarter appear to us to be transitory," he added.
The Fed now expects growth for 2011 to be between 3.1% and 3.3%.