The US economy grew at an annualized rate of 2.5 per cent in the first quarter, a government estimate showed Friday. However, the increase was less than the 3 per cent gain many analysts had expected.
The gains follow an especially lacklustre economic performance in the fourth quarter of 2012, when the gross domestic product of the world's biggest economy increased by only 0.4 per cent, the Commerce Department said.
Consumer spending helped lead the increase, as well as a boost in housing and stock prices. These offset higher payroll taxes that have gone into effect. Restocking of inventory also played a role in the increase, as well as higher exports.
The 3.2 per cent jump in consumer spending was the largest in two years, the White House said.
"Today's report indicates that the economy posted its fifteenth straight quarter of positive growth ... Over the last 15 quarters, the economy has expanded by 8.3 per cent overall," said Alan Krueger, chairman of the Council of Economic Advisors for the White House.
There is concern, however, that as government spending slows down as a result of sequestration, which began March 1, the momentum from the first quarter of this year will not be sustained.
Already economic indicators released in March reflected a slowdown in the US economy.
"It is likely that the contraction in Federal defence and non-defence spending, at least in part, reflects the onset of sequestration," said Krueger.
"These arbitrary and unnecessary cuts to government services will be a headwind in the months to come, and will cut key investments in the nation's future competitiveness."
The Commerce Department is to release a second first-quarter figure based on more complete data on May 30.
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