WASHINGTON -- The pace of economic growth picked up in the first quarter, but not nearly as fast as many analysts had forecast -- an unwelcome sign given other recent indicators that the recovery is losing some steam and further government spending cuts loom.
The nation's economic output expanded at an annual rate of 2.5% in the quarter, the Commerce Department said Friday. That was up from 0.4% growth in the final three months of last year as defense spending fell sharply and companies stockpiled less inventory.
As expected, business inventories rebounded at the start of this year. And the cuts in federal defense were smaller. Plus there was an acceleration in consumer spending. All of these helped lift growth in gross domestic product to a more normal rate as the 4-year-old recovery has averaged growth of about 2% annually.
But after the unusually weak performance at the end of last year, many analysts had forecast GDP to bounce up by 3% or more in the first quarter. But business investment slowed, and weaker trade also held back growth.