Economy, business investment slowing

During the first quarter, the U.S. gross domestic product (GDP) grew at its weakest pace in two years, slowing to a 3.1 percent annual expansion rate as consumers and businesses curbed spending amid rising prices, the Department of Commerce said today. Down from the 3.8 percent rate recorded in the fourth quarter 2004, the GDP was the weakest since the first quarter 2003's 1.9 percent.

Consumer spending growth slowed to a 3.5 percent annual rate in the first quarter, down from 4.2 percent in the fourth quarter 2004, and from 5.1 percent in the third quarter.

Even more noticeable was the decline in the business investment growth rate, down to a 4.7 percent annual rate from 14.5 percent in the final quarter 2004. Equipment and software spending grew at a 6.9 percent rate in the first quarter after an 18.4 percent rise in the fourth quarter 2004.