U.S. Economic Growth Slows
WASHINGTON, April 27 (Reuters) – U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a slower pace, but the biggest rise in consumer spending in more than a year cushioned the blow.
Gross domestic product expanded at a 2.2 percent annual rate, the Commerce Department said on Friday, moderating from the fourth quarter’s 3 percent rate.
Economists had expected somewhat firmer growth, but were taken by surprise by a big drop in defense spending. Still, growth was stronger than the 1.5 percent or less pace analysts had anticipated early in the quarter.
The pace of growth remained too soft to offer comfort to President Barack Obama as he seeks a second term, but did not appear weak enough to alter the wait-and-see stance on monetary policy at the Federal Reserve.
“There’s nothing catastrophic happening, this is just slow growth and this underscores that the economy is on sound footing but nothing more,” said Steven Baffico, chief executive at Four Wood Capital Partners in New York.
Government spending dropped for a sixth straight quarter as defense outlays fell and austerity at state and local governments showed few signs of easing.