U.S. Economic Growth Pared to 1.8%

A 7.9% cut in federal government spending, and a 3.3% cut in spending by local authorities, were factors in the slowdown.

As governments slashed spending, growth slowed sharply in the first quarter to a 1.8%, the Commerce Department said on April 28.

After the growth hummed at a 3.1% pace in the fourth quarter of 2010, the department's first estimate for the January-March period showed weakness in the recovery from the 2008-2009 recession.

A 7.9% cut in federal government spending, and a 3.3% cut in spending by local authorities, were factors in the slowdown.

Also contributing was the sharp rise in fuel and food commodity prices, which slowed personal consumption growth to 2.7% from a 4% pace in the previous quarter.

But, with the recovery feeble and the jobless rate at a still-high 8.8%, Americans also saved more in the quarter, putting away a significant chunk of the period's 8.3% rise in income that came from a temporary cut in payroll taxes granted by the government.

The growth estimate was called an "advance" figure, and the Commerce Department will update and revise the figure over the next two months. But it was in line with economists' estimates of 1.8%.

On April 27 the Federal Reserve lowered its growth estimate for the whole year to 3.1%-3.3%, from its January projection of 3.4%-3.9%.

Copyright Agence France-Presse, 2011

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