The nation's economy grew at a 2.5 percent pace during the first three months of the year, slightly below estimates as concerns linger about the health of the recovery.
Friday's figure is an improvement from the anemic 0.4 percent growth reported in the fourth quarter of last year, but falls well short of projections for growth of up to 3.4 percent.
Alan Krueger, chairman of the Council of Economic Advisers, said that "while there is more work to be done, this report, together with other economic indicators, provides further evidence that the economy is moving forward in the right direction."
One bright spot in the report was consumer spending, which makes up about 70 percent of economic activity. It increased an at annual rate of 3.2 percent at the beginning of the year, the fastest pace since the final quarter of 2010.
Another positive was the 12.6 percent increase in residential construction, the eighth straight quarter of growth, the longest streak since 2004-2005 and more proof of the improving housing market.
Government spending fell at a 4.1 percent rate as the cuts from sequestration began. Without those reductions in federal spending, economists said, growth for the quarter would have eclipsed 3 percent.
Defense spending fell 11.5 percent at an annual rate after falling more than 20 percent in the last three months of 2012, which was the largest drop in 40 years.
Mark Zandi, chief economist for Moody's Analytics, expected gross domestic product to hit about 3.4 percent last quarter but said that overall growth is probably hanging in around 2 percent, unchanged since the recovery began in 2009.
Still, with $85 billion in across-the-board spending cuts kicking into gear, Zandi and other analysts expect growth to tail off again through the spring and summer.
"It is clear that the underlying growth trend for the U.S. economy remains exceedingly fragile — and we have barely only begun to feel the impacts of sequestration’s automatic spending cuts," said Adam Hersh, an economist for the Center for American Progress.
The Congressional Budget Office has estimated the sequester will cut GDP by 0.6 percentage point and, potentially, cost upward of 750,000 jobs.
The year started off strong in January and February with rising job creation numbers, but slowed sharply in March with only 88,000 jobs added.
Josh Bivens, research and policy director for the Economic Policy Institute, said the report shows that the economy "is growing just above stall-speed." He said the pace of expansion of the economy is only enough to reduce unemployment slowly.
This story was updated at 11 a.m.