US economy grew just 2.7% in Q1

The US economy grew just 2.7 per cent in the first three months of 2010, much less than earlier projected, indicating a slower recovery.

The lower growth, as compared to last month's official projection of three per cent expansion in the first quarter, was mainly on account of smaller gains in consumer spending.

"Real gross domestic product -- the output of goods and services produced by labour and property located in the United States -- increased at an annual rate of 2.7 per cent in the first quarter of 2010," according to the final estimates released today by the US Bureau of Economic Analysis.

Analysts were expecting first-quarter economic growth of three per cent or more.

The latest growth figure of 2.7 per cent, based on more complete source data, comes close on the heels of the US Federal Reserve cautioning that the economic recovery is being impacted by overseas problems.

In the first quarter, real personal consumption expenditures increased three per cent against last month's estimate of 3.5 per cent, official data showed.

PCE went up 1.6 per cent in the quarter ended December, 2009.

In the last three months of 2009, the world's largest economy witnessed a growth of 5.6 per cent.

"The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures, private inventory investment, exports and non-residential fixed investment...," BEA noted.

Even though the US has been on the recovery path since late last year, the country's economic activities have been adversely hit by global developments, especially the spiralling debt turmoil in Europe.

After leaving key rates unchanged at near-zero levels on Wednesday, the Fed said that overseas problems have resulted in less conducive financial conditions for the country's economic growth.

The apex bank also pointed out that the economic conditions are likely to warrant exceptionally low levels of the federal fund rate for an extended period.