Surging petrol prices and sharp cutbacks in government spending caused the U.S. economy to grow only weakly in the first three months of the year. Consumer spending slowed even more than previously estimated.
The Commerce Department says the overall economy grew at an annual rate of 1.8 per cent in the January-March quarter. That was the same as the government’s first estimate a month ago. Consumer spending grew at just half the rate of the previous quarter. And a surge in imports widened the U.S. trade deficit.
Many economists believe the economy is growing only slightly better in the current April-June quarter. Consumers remain squeezed by relatively high petrol prices near $4 a gallon ($1 per litre) and renewed threats from Europe’s debt crisis.