U.S. economic growth accelerated from January through March to a 2.5 percent annual rate. That’s up from a tepid 0.4 percent growth rate in the October-December quarter.
The first-quarter gain was driven by the fastest growth in consumer spending in two years. More home construction and faster restocking by businesses also helped growth. Farm inventories also rose strongly after being hurt by last summer’s Midwest drought.
But government spending fell, led by deep defense cuts. Most economists expect federal budget cuts and higher Social Security taxes will slow growth later this year.
Here are the contributions made by the largest sectors of the economy in the first quarter:
|Percentage-point impact on growth|
|Home construction, renovation||+0.31|
|Business and farm stockpiling||+1.03|
|Change in trade deficit||-0.5|
|Source: Bureau of Economic Analysis|