US economic growth pared to 1.8 percent rate

The slowdown came as personal consumption slowed © AFP/Getty Images/File Justin Sullivan

AFP

WASHINGTON (AFP) – US economic growth slowed sharply in the first quarter to a 1.8 percent pace as governments slashed spending, the Commerce Department said Thursday.

After the growth hummed at a 3.1 percent pace in the fourth quarter of 2010, the department’s first estimate for the January-March period showed weakness in the recovery from the 2008-2009 recession.

A 7.9 percent cut in federal government spending, and a 3.3 percent cut in spending by local authorities, were factors in the slowdown.

Also contributing was the sharp rise in fuel and food commodity prices, which slowed personal consumption growth to 2.7 percent from a 4.0 percent pace in the previous quarter.

But, with the recovery feeble and the jobless rate at a still-high 8.8 percent, Americans also saved more in the quarter, putting away a significant chunk of the period’s 8.3 percent rise in income that came from a temporary cut in payroll taxes granted by the government.

The growth estimate was called an “advance” figure, and the Commerce Department will update and revise the figure over the next two months.

But it was in line with economists’ estimates of 1.8 percent.

On Wednesday the Federal Reserve lowered its growth estimate for the whole year to 3.1-3.3 percent, from its January projection of 3.4-3.9 percent.

© AFP — Published at Activist Post with license