US economy: That sputtering sound

The latest check-up on the U.S. economy — the world's largest — is in.

U.S. gross domestic product slowed to 1.8 percent in the first quarter of the year. That's down from 3.1 percent in the last three months of 2010, though that benchmark indicator is pretty much in line with most economist estimates.

“We’ve sputtered a bit here, especially coming off a relatively strong fourth quarter,” Sam Bullard, a senior economist at Wells Fargo Securities told Bloomberg.

The culprit?

Government spending — a serious engine of economic growth — plunged in the first quarter to its lowest level since 1983. On the plus side consumer spending rose at a rate of 2.7 percent, better than forecasts, though down from its 4 percent tear at the end of last year.

Higher inflation, particularly rising food and fuel prices, has been a big drag on spending in 2011.

“Increases in the prices of energy and other commodities have pushed up inflation in recent months,” the Federal Open Market Committee said yesterday in its statement after a two-day policy meeting in Washington.

But, overall, U.S. Federal Reserve Chairman Ben Bernanke, in a rare news conference yesterday, was upbeat about the current state of the U.S. economy:

“I would say roughly most of the slowdown in the first quarter is viewed by most on the committee as transitory,” he said.

The Fed will continue to support the U.S. economy through its $600 billion QE2 stimulus plan, which will go through the end of June.

The biq question: will that Fed help be enough to get consumer confidence back to a level where people start buying more stuff, and the economy grows faster?

Economist Bullard, for one, thinks so:

"Consumers are going to continue to spend. Growth should pick up toward the 3 percent level” later this year, he told Bloomberg.