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Consumer spending fuels Q1 economic growth

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By Jeannine Aversa

WASHINGTON (AP) — The economy grew at a solid 3.2 percent pace during the first quarter of this year as consumers boosted their spending by the most in three years.

The Commerce Department's initial estimate of the economy's performance in the January-to-March quarter, released Friday, provided more evidence that the economy is strengthening. It marked the third straight quarterly gain as the United States heals from the longest and deepest recession since the 1930s. Still, growth was weaker than in the fourth quarter of last year, when the economy grew at 5.6 percent.

Consumers rebounded and powered the first-quarter's growth. They increased their spending at a 3.6 percent pace, the strongest showing since early 2007 — before the economy tipped into a recession. That marked a big improvement from the fourth quarter when consumer spending grew at a lackluster 1.6 percent pace.

Even though consumers aren't spending as freely as they normally do early in strong economic recoveries, they are spending sufficiently to keep the economy expanding.

Looking ahead, analysts believe consumers will be wary of stepping up spending much further. The unemployment rate is high at 9.7 percent and is expected to stay elevated in the months ahead. Sluggish income growth and problems getting loans could restrain shoppers' appetite to spend, they say.


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