US economy grows 2.5% in first quarter

US economy grows 2.5% in first quarter The US economy grew at an annualised rate of 2.5 per cent in the first quarter of 2013 as disappointing figures were hit by another slide in federal defence spending.

Defence knocked 0.6 percentage points off the total, following a similar decline in the fourth quarter of last year, suggesting that cuts to the military under sequestration are biting deep.

Final sales of domestic product – a measure that gives one of the best indications of underlying demand in the economy because it knocks out inventories – rose by a fairly weak 1.5 per cent.

The figures suggest that the squeeze on government spending may be having bigger than expected effects on the US economy, keeping it trapped in a pattern of steady but mediocre growth, despite a pick-up in the housing market.
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