US economy slows in first quarter of 2012

Consumers are buying again (especially cars), and that’s good news for the US economy, which slowed slightly in the first quarter because of governments and businesses still wary of the recession, Reuters reported. 

The Commerce Department today said the US gross domestic product grew by 2.2 percent from January to March, backing away from three percent gains made in the final quarter of 2011.

While the decrease may discourage some – it’s below the 2.5 percent forecast from economists – it’s much better than the 1.5 percent some analysts had predicted earlier this year.

Steven Baffico, chief executive at Four Wood Capital Partners in New York, told Reuters there’s little cause for concern.

“There’s nothing catastrophic happening, this is just slow growth and this underscores that the economy is on sound footing, but nothing more,” he said.

The heavy lifting came from consumer spending, which increased 2.9 percent, MSNBC said.

Consumers account for about 70 percent of the US economy.

That figure is the best since late 2010, coming thanks to the highest car sales in four years.

“Certainly a bit of a mixed picture, a disappointment on the headline coming in at 2.2 versus expectations of 2.5,” Scotia Capital strategist Camilla Sutton told MSNBC. “Personal consumption was positive. But overall weaker-than-expected GDP.”

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Government reductions and weaker business investment held the economy back, The Associated Press reported. 

As they grapple with budget deficits, government spending dropped three percent, and American businesses are struggling to sell overseas.

Europe’s debt crisis and meek Asian growth are still having an impact in the US, according to the AP.

Overall, however, there are more positive than negative signs.

Many experts said growth in all of 2012 would increase to three percent. The March unemployment rate fell to 8.2 percent from 9.1 in August, housing improved slightly and consumers are shedding debt, the AP reported.

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