First-quarter economic growth slows to a sluggish 1.8 percent

The U.S. economy’s growth slowed in the first quarter of 2011 as consumers were faced with higher prices for food and gas.

The Commerce Department announced Thursday that gross domestic product had increased at a 1.8 percent rate in the first three months of the year. The economy had grown at a 3.1 percent pace in 2010’s last quarter. 

{mosads}Economists and forecasters had largely expected sluggish growth, with many predictions coming in at 2 percent or slightly below.

President Obama is hoping a stronger economy will help boost him to a reelection victory next year, and the White House has been pleased with a falling unemployment rate and a private sector showing signs of a recovery. Wall Street has expressed confidence in the economy’s future this year, with markets rising to their highest levels in years. 

Commerce’s report that the economy grew by less than 2 percent suggests it will take time to add jobs to payrolls lost during the worst recession in decades. It might also add to the pressure the White House is already feeling about high gas prices and the risk of inflation.

“While the continued expansion is encouraging, clearly, faster growth is needed to replace the jobs lost in the downturn,” said Austan Goolsbee, chairman of the Council of Economic Advisers.

House Speaker John Boehner (R-Ohio) responded to the first-quarter numbers by slamming the president for making the gas price situation worse and noting that his chamber would be taking action on that front. 

“While any positive growth is welcome, we are still not seeing the type of economic growth and private-sector job creation needed to help Americans who are struggling across this country,” Boehner said in a statement.

Still, the Federal Open Market Committee, the Fed’s policymaking arm, also rolled back its own projection for economic growth in 2011, to 3.1 percent to 3.3 percent, from 3.4 percent to 3.9 percent. 

Americans paid 3.8 percent more on purchases in the first quarter, Commerce said, with inflation coming in at 2.2 percent when not considering food or energy prices. 

Government spending also decreased nearly 8 percent, while defense spending fell even more — by 11.7 percent. Residential construction also fell off by 4.1 percent, an outcome analysts blame at least in part on bad weather. 

Second-quarter economic growth, at least at this point, is expected to be stronger, in part because of the strengthening job market. Bernanke also said Wednesday that he expects gas prices to stabilize. 

In releasing its projections, Commerce’s Bureau of Economic Analysis stressed that the current estimate was likely based on incomplete data. The department will release a revised projection next month.