The U.S. economy, as measured by the gross domestic product (GDP), pushed forward at a pedestrian rate during the opening three months of this year, gaining just 2.2%. Consensus expectations had been for an increase of 2.6% in the period. In fact, some investment houses had recently been calling for growth of more than 3%. Our expectation, published in our February 24th Quarterly Economic Review, had been for a more moderate expansion rate of 2.5%.

Meanwhile, pushing the economy forward in the recently concluded period was a solid 2.9% rate of growth in consumer spending. That was the fastest rate of gain in this core economic category--which accounts for some two-thirds of aggregate GDP--since the fourth quarter of 2010. The strong pickup in spending, we suggest, was helped by an unseasonably warm winter across much of the nation and the early arrival of Easter. Growth was restrained by a slowdown in private inventory investment. A large gain here had keyed the fourth-quarter GDP increase 3.0%.

Also holding back growth in the recent quarter were downturns in nonresidential fixed investment--a category that includes spending on structures, computers, and industrial equipment--and government spending. This latter metric is likely to continue to push lower due to major budgetary concerns at the federal, state, and local levels.

Helping the economy in the opening quarter were gains in residential construction, motor vehicle output, exports, and durable goods production. Taken as a whole, though, the report, while not all that surprising, was still rather disappointing. Our early take on the rest of the year is that GDP growth will proceed at a similarly unimposing rate, with some potential for a more definitive pickup later on in 2012. However, this figures to be a much better performance than we will see out of Europe, which now looks as though it is mired in a recession of some note across much of the Continent. Troubling consumer sentiment data just issued for March only underscores this likely shortfall in output.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.