WASHINGTON — The U.S. economy grew at an annual rate of 1.8 percent in the first three months of the year, significantly slower than first thought. The steep revision occurred mostly because consumers spent less than previously estimated, a sign that higher taxes could be dampening growth.
The Commerce Department revised its estimate of economic growth for the January-March quarter down from a 2.4 percent annual rate. The revised rate was still faster than the 0.4 percent rate in the October-December quarter.
Economists had thought growth in the April-June quarter would be 2 percent or less. Analysts had also expected growth to strengthen in the second half of this year. The downgrade for the January-March quarter will likely change those estimates.
It might also affect the timing of the Federal Reserve's plan to scale back its bond-buying program. Chairman Ben Bernanke said last week that the Fed would likely start to slow its bond purchases later this year and end them next year if the economy continues to strengthen. The Fed's bond purchases have helped keep long-term interest rates low.
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