Stuck In The Slow Lane

The American economy remained stuck in the slow lane over the first three months of the year, expanding by a modest 0.6 percent annualized rate, the Commerce Department announced Wednesday morning.

The weak performance reflected the increasingly thrifty inclinations of American consumers in the face of plummeting real estate prices, tightening credit and a deteriorating job market. Economic growth was also hampered by a continued pullback in construction and business investment.

The only factors preventing the economy from sliding backward were the growth of American exports -- aided by a weakening dollar -- and a buildup of inventories by businesses. Exports and inventories set aside, final sales of American goods and services domestically dipped at a 0.4 percent annualized rate in inflation-adjusted terms, the first decline since the end of 1991.

Consumer spending grew at an anemic 1 percent annualized rate, down from 2.9 percent in 2007 and 3.1 percent the year before.

"You're seeing a sharp slowdown in domestic demand," said Michael T. Darda, chief economist at MKM Partners in Greenwich, Conn. "This is stall-speed growth."

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