MercoPress. South Atlantic News Agency

US economy first quarter growth slowest in four years

The United States economy grew at the slowest pace in four years in the first three months of this year. Thursday's report from the Commerce Department says the gross domestic product, GDP, of the United States grew just 0.6%.

The first quarter growth was slower than the 1.3% originally estimated and below the 2.5% of the fourth quarter of 2006. Analysts were estimating 0.8%. Economists blame the slow expansion on the rising trade deficit, the housing slump and the large number of businesses that have been cutting investment in goods they hold in inventory. The real GDP deceleration in the first quarter primarily reflected an upturn in imports, downturns in exports and in federal government spending, plus deceleration in personal consumption for non-durable goods, the Commerce Department said. In the first quarter, US exports of goods and services fell by 0.6% after having surged 10.6% in the previous quarter, while imports of goods and services rose by 5.7%, compared to a drop of 2.6% in the final quarter of last year. The trade deficit is blamed for the loss of a full percentage point from GDP in the first quarter. Furthermore companies running down stockpiles knocked down almost another full percentage point. Federal government expenditure decreased by 3.9% in the first quarter after a strong 4.6% expansion at the end of 2006. Investment in home building dropped by 15.4% in the first quarter, however this was not as pronounced as the 19.8% in the last quarter of 2006. However consumer spending, which accounts for two thirds of overall US economic activity, rose by 4.4%, up from 4.2% in the previous quarter. A separate government report from the Labour Department Thursday showed the number of Americans signing up for unemployment aid dropped by 4,000 last week, to just 310,000. Experts say that level is low enough to indicate growing strength in the job market. However a more detailed look at the U.S. employment situation comes Friday when the government publishes the unemployment rate for the month. The jobless rate is estimated to remain at a relatively low 4.5%.