US economy accelerates at 2.5 per cent rate in first quarter, propelled by consumer spending

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In this April 4, 2012 photo, a worker at the Ford Stamping Plant moves a stack of Lincoln MKS body sides in Chicago Heights, Ill. THE CANADIAN PRESS/AP, Charles Rex Arbogast

WASHINGTON – U.S. economic growth accelerated from January through March, buoyed by the strongest consumer spending in more than two years. The strength offset further declines in government spending that are expected to drag on growth throughout the year.

The Commerce Department says the overall economy expanded at an annual rate of 2.5 per cent in the first quarter, rebounding from the anemic 0.4 per cent growth rate in the October-December quarter.

Much of the gain reflected a jump in consumer spending, which rose at an annual rate of 3.2 per cent. That’s the best since the end of 2010. Businesses responded to the greater demand by rebuilding to their stockpiles. And home construction rose further.

But government spending fell, led by another deep cut in federal defence spending.

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