Washington – The U.S. economy grew in the first quarter at a pace that beat previous government estimates but was still lower than what analysts were anticipating and was accompanied by higher-than-desired inflation, the Commerce Department said Friday.
In its third and final calculation of first-quarter gross domestic product, the government said the economy grew at an annual rate of 1.9 percent (from the fourth quarter to the first quarter), up one-tenth of a percent from a previous estimate.
Friday's results confirmed the U.S. Federal Reserve's report of a slowdown in growth almost two years after the world's largest economy emerged from its worst recession in eight decades.
The expansion in the first quarter was lower than analysts' projections of 2 percent growth and down from the 3.1 percent GDP rise in the last quarter of 2010.
After a two-day meeting this week, the Federal Reserve lowered its growth projection for the U.S. economy for 2011 and 2012 and raised its unemployment forecast. It did not announce new stimulus measures but said it will keep interest rates at minimal levels.
The Fed is now projecting that the U.S. economy will grow at a rate of between 2.7 percent and 2.9 percent this year, down from an April estimate of between 3.1 percent and 3.3 percent.
It also has lowered its growth forecast for 2012, projecting the U.S. economy to expand by between 3.3 percent and 3.7 percent next year, down from an April forecast of between 3.5 percent and 4.2 percent growth.
Friday's report showed that the price index for gross domestic purchases, which measures prices paid by U.S. residents, was up 3.9 percent from the first quarter of 2010, compared with an earlier estimate of a 3.8 percent rise.
The Federal Reserve pays more attention to underlying, or core, inflation, which excludes food and energy prices.
Excluding those more volatile items, the price index for gross domestic purchases climbed 2.3 percent in the first quarter, compared with an increase of 1.1 percent in the fourth.
The report also showed that corporate pre-tax profits in the first quarter rose 7.8 percent, while a drop of 4.2 percent in spending by state and local government agencies - the biggest decline since 1981 - held back GDP growth.