WASHINGTON (4/29/13)--U.S. economic growth in the first quarter was slower than expected, with gross domestic product expanding at a 2.5% annualized pace, the Commerce Department said Friday.
With a decline in defense spending mitigating the largest increase in consumer spending in two years, the slow first-quarter growth could be setting the template for another year of slow growth (The Wall Street Journal, Bloomberg.com and The New York Times April 26).
Economists in a Bloomberg survey forecast 3% growth, while a Dow Jones Newswires survey of economists predicted a 3.2% annualized expansion.
Rising home and stock prices boosted wealth and that, combined with reduced consumer savings, helped U.S. households mitigate an increase in the payroll tax now being felt by consumers, Bloomberg said.
Given all the first-quarter economic headwinds, consumers displayed resilience, Michael Feroli, chief U.S. economist at JPMorgan Chase and Co. in New York, told Bloomberg.
The softening in government spending will be a factor that will make it hard to duplicate the first-quarter's economic performance in the second quarter, he added.