US raises new fears over speed of economic recovery

The US economy has not grown as fast as previously estimated, adding to concerns that the recovery there may be running out of steam.

In its final estimate of growth in January, February and March, the Commerce Department said GDP expanded at a 2.7% annual rate — equivalent to 0.7% in the quarter — instead of the 3% pace it reported last month.

Markets had been expecting the figure to come in at 3% again. The downward revision was made because businesses had not been spending as much as previously estimated.

Recent figures on the US economy have indicated that the momentum of growth had been tailing off during the second quarter. Consumer spending remains restrained and unemployment high, and the property market is faltering.

The slow pace of consumer spending's recovery after the recession is one reason the Obama administration eyes with such concern the austerity packages being launched in the UK and Europe. Without exports to big economic zones, the reasoning goes, how will the US economy grow at a time of low domestic demand for its goods?