US economic growth was slower than previously estimated in the first quarter as estimates of business and consumer spending were cut, according to official data.
In its final estimate, the US Commerce Department said gross domestic product expanded at a 2.7% annual rate instead of the 3% pace it reported last month.
Although the growth pace was below market expectations for a 3% rate, it still marked three quarters of expansion in a row as the economy digs out of its most brutal downturn since the 1930s. The Federal Reserve this week struck a cautious note on the economy and said the recovery was 'proceeding'.
The economy is, however, not expected to fall back into recession. GDP, which measures total goods and services output within US borders, grew at a 5.6% pace in the fourth quarter.
Growth in the January-March period was held back business spending, which only rose at a 2.2% rate instead of 3.1% as reported last month.
This was as a spending on structures was revised down to show a slightly bigger decline than reported last month. Growth in software and equipment investment was also lowered to a 11.4% rate from 12.7%.
Weak investment in home building chipped away at growth in the first quarter. The decline in home construction followed two-straight quarters of growth and underscored the fragility of the housing market's recovery from a three-year slump.
Growth in consumer spending was also revised down to a 3% rate. Although the rise was below the 3.5% pace reported last month, it was still more than double the 1.6% pace in the fourth quarter and the largest advance in three years.