US economic slowdown is confirmed

Corporate profits unexpectedly fell in the first three months of the year

US growth slowed in the first three months of 2011 to an annualised rate of 1.8%, which is a 0.4% quarterly rise, the Commerce Department has confirmed.

This compares with an annual growth rate of 3.1% in the final three months of 2010.

The slowdown was blamed on corporate profits unexpectedly contracting for the first time in more than two years.

Many analysts had been expecting the growth figure to be revised upwards to about 2%.

US GDP is expressed as an annualised rate, or annual pace, which shows what the three months’ economic activity would mean if it carried on for a year.

Growth in consumer spending, which accounts for more than two-thirds of US GDP, was revised down from 2.7% to 2.2%.

That was balanced by an upward revision to the amount of money businesses were spending on restocking, which was increased from $43.8bn (£26.8bn) to $52.2bn.

“There is no doubt the economy has slowed. We will call the first half of 2011 as a soft patch,” said Robert Dye at PNC Financial Services in Pittsburgh.

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