April 26, 2013 -- The U.S. economy expanded at an annual rate of 2.5 percent in the first three months of 2013, according to the Commerce Department, boosted by consumer spending and offset by decreases in government spending.
The Commerce Department released its first estimate of U.S. economic growth for the first quarter, but is expected to revise the figure two times.
The figure was lower than the 3.2 percent annual rate many economists had expected, though it was up significantly from the growth of the last quarter of 2012.
Last month, the Bureau of Economic Analysis within the Commerce Department reported that real gross domestic product, the output of goods and services produced in the country, grew at an annual rate of just 0.4 percent in the fourth quarter.
The department previously reported that real GDP grew 3.1 percent in the third quarter.
Peter Morici, professor at the Smith School of Business, University of Maryland School, points out a number of one-time factors contributed to the growth in the first quarter.
In the fourth quarter of 2012, business investments in inventory and defense purchases were "uncharacteristically weak," he said in a note, pushing up these figures in the first three months of this year. To avoid higher taxes in 2013, higher corporate bonuses and dividend payments at the end of last year pushed up consumer spending in the first quarter. Morici stated these factors likley will not repeat in the second quarter.
"Along with sequestration, higher taxes are subtracting more than $200 billion from household purchasing power and government spending-that is slowing demand for what Americans make and makes jobs tougher to find," said the former chief economist at the U.S. International Trade Commission.