The U.S. economy grew more slowly in the first three months of this year, as stronger consumer spending was offset by reductions in business investment, the government reported Friday, suggesting that the economy will continue to expand slowly and steadily. The Commerce Department said gross domestic product (GDP) - the country's total output of goods and services - expanded at a 2.2 percent annual rate in the first quarter, compared with a 3 percent gain in the fourth quarter of 2011. While first-quarter GDP growth was below economists' expectations for a 2.5 percent annual pace, consumer spending - which accounts for 70 percent of U.S. economic activity - grew 2.9 percent, the fastest pace in more than a year. The strength in consumer spending came from a second consecutive quarter of growth in auto purchases. But business spending fell for the first time since late 2009, with investment in equipment and software rising at its slowest pace since the recession ended. Business spending fell at a 2.1 percent pace after rising 5.2 percent in the fourth quarter of 2011. The 2.2 percent first-quarter growth marked the 11th consecutive quarter that GDP has expanded since the deep 2007-2009 recession ended in June 2009. But the gains have been far below the usual increases immediately after a recession. In 2011, the economy expanded only 1.7 percent, but growth is expected to rebound to around 3 percent for all of 2012 as stronger job growth sparks more consumer spending.
