The economic report for the first quarter of 2013 was released by the U.S. Commerce Department Friday, and it shows that while the nation's economic growth has increased, it has fallen short of expectations. Experts fear that the report is a sign that the U.S. economy will struggle as the sequester spending cuts continue to take hold.

 

The report shows that the gross domestic product grew at a 2.5 percent annual rate, which is a huge improvement from the 0.4 percent grown in Q4 of 2012, but fails to meet the 3.0 percent mark that economists had expected. In addition, growth in various categories such as employment and retail sales dropped considerably in March, when the sequester cuts began to take effect. ING economist Rob Carnell told BBC News that the slower growth is expected to continue into the second quarter and that a "rogue negative quarter" may even be possible.

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Consumer spending, which accounts for two-thirds of the U.S. economy, had its steepest growth since Q4 of 2010, rising by 3.2 percent. But even that news came with signs of trouble in the future. The rate of disposable income saved dropped from 4.7 percent last quarter to 2.6 this quarter, and the average income dropped by 5.3 percent, according to Reuters.

 

The report could lead the Federal Reserve to maintain its economic stimulus plan, which involves buying $85 billion in bonds per month. There was little reaction from Wall Street to the report, as the Dow Jones rose almost 12 points Friday while the NASDAQ composite and S&P 500 dropped 11 and 3 points, respectively. 

 

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