The U.S. economy accelerated at the beginning of the year, but don’t get too excited. Economists aren’t very optimistic that trend will continue in the months ahead.
Gross domestic product — the broadest measure of economic output — rose at a 2.5% annual pace in the first three months of the year, driven largely by a pick-up in consumer spending on services, the Commerce Department said.
Consumer spending, which alone accounts for roughly two thirds of GDP, rose at a 3.2% annual pace.
That boost largely came from spending on services, including spending on housing and utilities, which rebounded after slumping following Hurricane Sandy in the prior quarter. This March was also the coldest since 2002, a weather patten that boosted the demand for heating.
Meanwhile, cuts in government spending dragged on growth in the first quarter and are likely to drag on the economy through the rest of the year.
Economic growth isn’t likely to be as strong in the second quarter. Other economic data already shows the economy may have lost some steam starting in March.
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