Washington, DC, Apr. 29--The economy strengthened during the first three months of the year, but at a weaker-than-expected pace, the government said Thursday in a report that also suggested inflation rose at a faster rate.
Gross domestic product increased during January through March at a 4.2% annual rate, slightly higher than the unrevised 4.1% pace in the fourth quarter, the Commerce Department said.
Driving GDP growth were consumer spending, business investment, government outlays, exports and inventory rebuilding.
First-quarter GDP was weaker than Wall Street had predicted.
A Dow Jones Newswires-CNBC survey of 20 economists forecast growth of 5.0% for the three-month period.
The report also showed gauges that measure inflation rose at a higher rate. The price index for gross domestic purchases climbed at a 3.2% rate in the first quarter; it advanced 1.3% in the fourth quarter. The government's price index for personal consumption rose at a 3.2% rate January through March, after going up 1.0%.
GDP is a measure of all the goods and services produced in the U.S. A key component of GDP is consumer spending, which accounts for about two-thirds of economic activity.
Spending by consumers rose 3.8% in the first quarter, after increasing 3.2% in the previous quarter. Purchases of durable goods, items meant to last three years or more, decreased 4.7%, after a 0.7% gain in the prior period. Non-durable purchases rose 6.4%, after going up 5.4%.
Business investment rose 7.2%, after a 10.9% advance in the fourth. Investment in non-residential structures went down 6.5%, after decreasing 1.4% in the fourth quarter. Spending on equipment and software rose 11.5%, after a fourth-quarter gain of 14.9%.
Businesses boosted inventories by $15.3 billion during the first quarter, after adding $9.0 billion the prior period. The change in inventories added 0.27 of a percentage point to GDP growth.
Real final sales of domestic product--that is, GDP less the change in private inventories--advanced at a 3.9% annual rate. Fourth-quarter real final sales climbed at an 3.4% annual rate.
Exports rose by 3.2%, while imports advanced by 2.0%.
Federal government spending went up 10.1% in the first quarter, compared with a 0.7% climb in the fourth. State and local government spending fell 2.6%.
