(MENAFN- AFP) The US economy ground almost to a halt in the first three months of the year amid severe winter weather, official data showed Wednesday.
Gross domestic product increased at an annual rate of 0.1 percent after hitting a 2.6 percent pace in the 2013 fourth quarter, the Commerce Department said.
It was the slowest growth since the last quarter in 2012. The slowdown was much sharper than expected, with most analysts having forecast a 1.0 percent pace.
Driving the slump were falling exports and business investment and a larger decrease in inventory investment.
Exports dived 7.6 percent after a 9.5 percent rise in the fourth quarter.
Another key factor was a modest slowdown in consumer spending, which accounts for about two-thirds of US economic activity. Consumer spending increased 3.0 percent, slowing from a 3.3 percent rise in the fourth quarter.
Spending fell mainly on nondurable goods, like clothing and food and beverages, while it picked up for utilities and healthcare.
The Commerce Department did not comment on the reasons behind the slowdown, but the Federal Reserve has said that bad winter weather in much of the country was partly to blame.
The data came as the central bank's Federal Open Market Committee met for a second day of deliberations on monetary policy. The FOMC is widely expected to announce later in the day a cut of $10 billion from its bond-purchase stimulus program, bringing it to $45 billion a month.
Inflation was slightly more subdued in the first quarter, coming in well below the Fed's 2.0 percent target. Prices of goods and services bought by consumers rose 1.4 percent in the first quarter, slowing from a 1.5 percent gain in the fourth quarter.
Excluding food and energy, so-called core prices rose 1.4 percent after a 1.8 percent gain in the prior quarter.
A bright spot was higher personal income that offered hope for stronger consumer spending in the second quarter. The increase in disposable personal income -- income adjusted for inflation and taxes -- more than doubled to 1.9 percent. The savings rate fell.
The report is the first of three estimates on growth. Most analysts expect the economy will bounce back in the current second quarter.
"In short, weak growth and tame inflation, with growth even weaker than expected based on the monthly data," said Jim O'Sullivan, chief US economist at High Frequency Economics.
But he said the monthly data have also signaled a pickup in growth later in the quarter and as the second quarter began.
"The pattern is consistent with the weakening being due in large part to weather effects and other sources of volatility rather than fundamental deterioration."
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