The economy lost momentum in the opening quarter of 2005, growing at an annual rate of 3.1 percent. The slowest pace of expansion in two years, amid soaring gasoline prices and rising interest rates, offered new evidence the economy has hit a soft patch.
The latest reading on gross domestic product, released by the Commerce Department today, showed that consumers and businesses turned cautious in their spending in the January-to-March quarter, a key factor in the slower economic growth. High energy prices and rising borrowing costs are causing Americans to tighten their belts a bit.
The first-quarter's GDP figure, down from a 3.8 percent pace logged in the final quarter of 2004, represents the economy's most sluggish showing since the first quarter of 2003, when economic activity expanded at an even more mediocre 1.9 percent rate.