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Sat Apr 28, 2012, 11:53 PM

Government cuts slow economic recovery [View all]

Source: Seattle Times

WASHINGTON The U.S. economy expanded at a sluggish 2.2 percent annual rate from January through March, the government said Friday in a confounding report that spotlighted the continuing challenge of spurring strong growth.

Most forecasters had expected growth in the 2.5 percent to 3 percent range. The disappointing first-quarter number mirrored the closely watched March jobs report, which also fell short by adding only 120,000 jobs after a string of stronger months.

While the headline number for gross domestic product the sum of goods and services produced in a year was short of expectations, the report's component parts offered rays of hope. They showed consumption remaining strong in the private sector, while continuing reductions in government spending dampened overall growth.

Federal government spending dropped 5.6 percent, with military spending down 8.1 percent. Spending by state and local government dropped by 1.2 percent. If only private-sector components of the GDP are taken into account, the economy grew at a 3.5 percent annual rate, according to Alan Krueger, head of the White House Council of Economic Advisers.

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Read more: http://seattletimes.nwsource.com/html/businesstechnology/2018090175_econ28.html

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