Washington, DC, April 28—-Gross domestic product in the first quarter grew at a 3.1% seasonally adjusted annual rate, according to estimates from the Commerce Department. The results were the slowest growth in two years.
GDP grew by 3.6% for all of 2005 and increased at a 3.8% rate in the fourth quarter.
Consumer spending, inventory building and business investment contributed most of the increase in gross domestic product in the first quarter, while foreign trade acted as a drag on growth. The impact from government spending was negligible.
Economists were expecting GDP to increase 3.6% in the quarter.
Final sales of domestic product increased 1.9% in the first quarter, the weakest performance in nine quarters. Domestic purchases increased 4.4% after running at 5% in the fourth quarter of 2004.
The report showed business investment slowing sharply from the fourth quarter, increasing at a 4.7% clip compared with 14.5%. Investments in equipment and software were the slowest in two years, rising 6.9% vs. 18.4% in the fourth quarter.
Consumer spending slowed slightly, growing by 3.5% in the first quarter after rising 4.2% in the fourth quarter. Spending on durable goods was flat, while spending on services accelerated.
Residential investments increased 5.7% in the first quarter after a 3.4% rise in the fourth quarter.
