US economic growth slowed more-than-expected to 2.2pc in the first quarter of the year, as stronger consumer spending was offset by cutbacks in government spending and business investment.
Street Promenade in Santa Monica, California. The US economy grew 2.2pc in the three months to March, with consumers spending accelerating at the fastest pace in more than a year. Photo: AP
By Telegraph Staff and agencies
2:39PM BST 27 Apr 2012
The GDP reading, which was below economists’ expectations of 2.5pc and down from a 3pc gain in the final quarter of 2011, could reignite fears for the US economy which is the biggest issue in this year’s presidential campaign.
Consumers spent at the fastest pace in more than a year, with spending accelerating to an annual rate of 2.9pc in the first quarter. The strength came from a second strong quarter of growth in car purchases. Consumer spending accounts for 70pc of US economic activity.
All levels of government remain under pressure as they struggle to control budget deficits. Government spending fell at an annual rate of 3pc in the first quarter.
The 2.2pc increase in the economy in the first quarter marked the 11th consecutive quarter that the gross domestic product has expanded since the deep 2007-2009 recession ended in June 2009.
However, the gains have been far below the usual increases coming out of a deep recession.