Economy grew at 2.4% annual rate in first quarter

WASHINGTON -- The U.S. economy expanded at a slightly slower pace in the first three months of the year than originally estimated, as steeper government spending cutbacks and reduced private investment dragged on growth.

The Commerce Department on Thursday reported that the nation’s total economic output -- also known as gross domestic product -- grew at a 2.4% annual rate. The initial estimate last month was a 2.5% annual growth rate in the first quarter.

The figure gets revised twice as government economists get more data. Analysts polled by Bloomberg had expected Thursday’s second estimate to remain the same.

The Commerce Department said growth was slightly slower because increases in exports, imports and inventory investment by private businesses were less than initially thought.

Quiz: Do U.S. corporations pay too little in taxes?

Growth is expected to slow in the second quarter as the impact of automatic federal spending cuts that kicked in on March 1 start affecting the economy.

Preparations for those cuts began hindering growth at the end of last year. A drop in government spending also hurt first quarter growth.

Federal, state and local government spending declined at a 4.9% annual rate, sharper than the 4.1% decline initially estimated.

The annual pace of federal spending was down 8.7% in the first quarter, with defense spending down 12.1%

“But the general picture of overall economic activity is not greatly changed,” the Commerce Department said.

Consumer spending helped boost the economy in the first quarter, jumping at a 3.4% annual rate, up from the initial estimate of 3.2%. That was nearly double the pace of the fourth quarter of 2012.

Corporate profits were down $43.8 billion to $1.97 trillion in the first quarter after a $45.4-billion increase the previous quarter, the Commerce Department reported.

After-tax profits declined at a 1.9% annual rate in the first quarter after growing at a 3.3% annual rate the previous quarter.

ALSO:

Retail rents starting to inch up

Farmers turn to drip-tape irrigation to save water

Chinese firm to buy pork producer Smithfield Foods