(MENAFN- AFP) The US economy grew at a slower-than-expected rate of just 0.5 percent in the first quarter hampered by sluggish consumer spending, the Commerce Department said Thursday.
It was the weakest growth since the first quarter of 2014, and followed a modest 1.4 percent in the final three months of 2015, painting a picture of weak momentum in the world's largest economy heading into the second quarter.
The expansion of gross domestic product, a broad measure of economic output, came in much below the 0.9 percent annual rate expected by analysts.
Consumer spending, which accounts for roughly two thirds of US economic activity, rose only 1.9 percent at the start of the year, its weakest gain since the 2015 first quarter. Purchases of goods was flat, up a bare 0.1 percent in the weakest performance in nearly five years that notably reflected low prices.
Another key brake on growth was business investment, which fell at the sharpest pace, 5.9 percent, since 2009 amid the Great Recession. Federal government spending also fell.
The housing market remained a bright spot in the stalling economy, as spending on home purchases jumped nearly 15 percent in the first quarter, the biggest advance since late 2102.
The Federal Reserve, which kept key interest rates unchanged Wednesday, noted slowing economic growth, citing in particular weak household spending and exports. But the central bank forecast that economic activity "will expand at a moderate pace."
"Looks grim, but the second quarter will be much better," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Shepherdson pointed to the temporary depressing effect of the stock market plunge in January and persistent problems in the Commerce Department's adjustment of first-quarter data for seasonal issues, which this year included a very early Easter.
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