Economic growth slower in the first quarter than initially reported

The economy grew more slowly in the first quarter, behind consumer spending levels that weren't as strong as initially reported, while imports increased. 

Gross domestic product, a measure of the nation's economic health, rose by 2.7 percent in the first three months of the year, slightly less than the 3 percent reported last month, the Commerce Department said Friday. 

That figure is much lower than the 5.6 percent pace in the fourth quarter of 2009. 

The good news is the economy has expanded for three straight quarters after a severe recession that saw the economy shrink for four quarters in a row, the worst stretch since World War II. 

Economists estimate that 3 percent growth is needed and at least 5 percent is optimal to create the jobs needed to lower the unemployment rate. Growth has averaged 3.5 percent over the past three quarters. 

Still, there is trepidation for future growth potential because of the European debt crisis that is likely to affect world trade and concerns about a contraction of business spending once companies build back their inventories. 

The phasing out of stimulus spending during the second half of the year might also negatively affect growth in the coming months, especially as state and local governments battle their own budget shortfalls. 

Despite a slower pace of consumer spending, consumption increased 3 percent in the first quarter compared with 1.6 percent in the fourth. 

An increase in imports, which are a subtraction in the calculation of GDP, slowdowns in private inventory investment, exports, residential and nonresidential fixed investment and a larger decrease in state and local government spending — of 4 percent — contributed to the revised figure. 

Real exports increased 11.3 percent in the first quarter, compared with an increase of 22.8 percent in the fourth. Real imports increased 14.8 percent, compared with an increase of 15.8 percent in the final quarter of 2009. 

Friday's estimate is the third and final made on quarterly GDP. The Labor Department revises based on new and expanded information after the initial reports.