As reported by Bloomberg’s Timothy R. Homan: Economy
The U.S. economy slowed more than forecast in the first quarter as government spending declined by the most since 1983 and household purchases cooled.
Gross domestic product rose at a 1.8 percent annual rate from January through March after a 3.1 percent pace in the final three months of 2010, the Commerce Department said today in Washington. Economists projected 2 percent growth, according to the median estimate in a Bloomberg News survey. Another report showed rising gasoline prices depressed consumer confidence last week.
To spur the economy, Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank would maintain record monetary stimulus after ending large-scale bond purchases in June. Job growth and income gains suggest consumers will keep spending in the face of higher fuel costs.
“We’ve sputtered a bit here,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who accurately forecast first-quarter growth. “Consumers are going to continue to spend. Growth should pick up toward the 3 percent level” later this year, he said.
Stocks rose, sending the Standard & Poor’s 500 Index to the highest levels since 2008, as better-than-estimated corporate earnings tempered concern over slowing growth. The S&P 500 climbed 0.4 percent to 1,360.48 at 4 p.m. in New York.
Consumer confidence in the U.S. fell last week for the first time in a month. The Bloomberg Consumer Comfort Index decreased to minus 45.1 in the period ended April 24, the lowest level since the end of March, from minus 42.6. Measures of personal finances and buying climate dropped.
New applications for jobless benefits unexpectedly rose last week to the highest level in three months, a report from the Labor Department showed. Unemployment insurance claims jumped by 25,000 to 429,000. The government anticipates a drop in unadjusted claims during the week leading up to the Easter holiday, something that didn’t happen this year, a Labor Department spokesman said.