Customers shop for fresh vegetables at a farmers market in San Francisco, California.
Sharp cuts to government spending and higher fuel and food prices slowed US growth in the first quarter, highlighting the weakness of the country\'s recovery, official data showed Thursday
Growth slowed to an annual pace of 1.8 percent in the January-March quarter, compared with a humming 3.1 percent in the fourth quarter of 2010, the Commerce Department said in its first estimate for the period.
The White House called the data \"encouraging\" but said the country needed to grow gross domestic product more quickly -- even though the Federal Reserve on Wednesday suggested it would soon wind up its stimulus measures.
\"Today\'s report shows that the economy posted the seventh straight quarter of positive growth, as real GDP,\" White House economic advisor Austan Goolsbee said in a statement.
\"While the continued expansion is encouraging, clearly, faster growth is needed to replace the jobs lost in the downturn.\"
The deceleration in the world\'s biggest economy was in line with analyst expectations, some of whom blamed heavy wintry weather for a key part of the figure: a downturn in investment in residential and non-residential buildings and structures.
But new figures on the jobs market also released Thursday underscored the frailty of the country\'s recovery from the 2008-2009 recession as 8.8 percent of workers remain jobless.
The Labor Department reported new claims for US unemployment insurance benefits that surged more than expected last week to the highest level since January: a seasonally adjusted 429,000, up from the prior week\'s 404,000.
A key ingredient in the slowdown was a 7.9 percent cut in federal government spending and a 3.3 percent drop in spending by state and local authorities.
The larger federal cut was in part explained by a likely temporary dip in military spending, but with pressure at all levels to pare debt, slower spending by authorities is expected to continue.
Private consumption, the biggest driver of the economy, continued to expand, but was also sharply off-pace: 2.7 percent, compared with 4.0 percent in the October-December period.
A sharp rise in fuel and food commodity prices contributed to the slower growth.
But, faced with a weak recovery and still-sluggish new job creation, Americans also saved more in the quarter, putting away a significant chunk of the period\'s 8.3 percent rise in income that came from a temporary cut in payroll taxes granted by the government.
Positive signs in the data for the period included a rise in investment in equipment, software and inventories, suggesting companies were more positive about the economic outlook and were in better financial condition.
\"Overall not great but not a disaster,\" Ian Shepherdson, economist at High Frequency Economics, said of the GDP data.
\"We expect a rebound in Q2 (the second quarter),\" he said.
Natixis economist Thomas Julien called the report \"not so disappointing.\"
\"The deceleration in consumption was less important than expected and most of the slowdown is attributable to temporary factors,\" he said, citing the huge eastern US snowfalls of January and February, and a slowdown of Chinese buying of US products during the lunar new year celebrations.
But other analysts were more pessimistic.
With the six-month growth rate at just over 2.4 percent, \"the economy?s growth isn\'t strong enough to put any downward pressure on the overall unemployment rate,\" said Josh Bivens of the Economic Policy Institute.
Despite the new data, on Wednesday the Federal Reserve said it still saw the economy expanding by 3.1-3.3 percent this year, and that it completing its \"qualititative easing\" stimulus program as planned in June.
Central bank chief Ben Bernanke acknowledged the challenges of joblessness and gas prices, but said the Fed could do little in the short term to ameliorate their impact on average Americans.
\"The pace of improvement is still quite slow, we are digging ourselves out of quite a big hole,\" he explained.
Bernanke left the door open for a new stimulus program if conditions prove worse than expected.