Economic growth still weak; Jobless claims jump

NEW YORK (CNNMoney) -- U.S. economic growth remained disappointingly weak the first three months of the year, the government reported Thursday....

Gross domestic product, the broadest measure of the nation's economic health, grew at an annual rate of 1.8% in the first quarter, according to the Commerce Department....

While the economy is still growing, most economists agree that it's not fast enough...

The report showed consumer spending slowed even more than originally expected, as consumption grew at only a 2.2% rate, a significant slowdown from the original 2.7% estimate...

The drop in consumption is a sign that consumers squeezed by higher energy and food prices are pulling back on their other spending, economists say. The report showed consumer prices rose 3.8% from the year before, more than twice the rate of inflation during the fourth quarter...

The higher rate of inflation is a drag on GDP, which is adjusted for inflation. As prices rise, even more growth is needed just to compensate for those increases...

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The Labor Department Thursday reported an unexpected jump in initial jobless claims to 424,000, marking the seventh straight week that closely-watched reading has been above the 400,000.

Paul Dales of Capital Economics said he also expects weak growth of close to 2% the rest of this year, and a slowdown in hiring.

"It just seems to make sense, when the economy is not that active, the economy just doesn't need as many new workers," he said....

Link to full article at CNN/Money:
http://money.cnn.com/2011/05/26/news/economy/gdp_report/index.htm