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Growth in US economy slows to 1.8%

04-29-2011 08:48 BJT

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US economic growth has slowed during the first three months of this year to an annualized rate of 1.8 percent, according to the US Commerce Department. Growth has been hampered by higher food and fuel prices and weaker consumer spending. Despite the sluggish pace, analysts remain hopeful the economy will regain speed in the second quarter.

The U.S. economy hit a major speed bump at the start of the year.

Gross Domestic Product, which measures goods and services produced within U.S borders, rose by an annual rate of 1.8 percent in the first quarter, a sharp slowdown from the 3.1 percent growth seen at the end of last year, according to the Commerce Department's first estimate.

The reasons: higher prices at the pump and at the supermarket dampened shopping activity. Consumer spending typically accounts for 70 percent of U.S. economic growth.

Government spending was the weakest in 27 years,

But the biggest blame is the weather, says Markus Schomer of PineBridge Investments.

He said, "I think we can hang - I would say three quarters on the weather. Because we end - the problem was we ended the fourth quarter on such a weak momentum, December and January were the weak months in terms of construction activity and in terms of consumption and that is now playing out in these numbers. Now I think we are ending this quarter on a much better note in terms of construction and retail sales, so we are already starting the second quarter in a much healthier state."

But that healthier state depends on a strengthening labor market. Unemployment claims surprisingly rose last week to their highest since January. New claims have held above 400,000 for a third week in a row, a benchmark level that economists say indicates the job market is losing strength.

 

Editor:Zhang Jingya |Source: CNTV.CN

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