Growth slowed in quarter

WASHINGTON - The nation's economy grew at a slender 1.3 percent annual pace in the first quarter, the slowest quarterly growth in four years, the government said yesterday.

The report raised some concern that troubles in the housing market could spread and throw the country into a recession before the year is out.

Growth in the January-March quarter, reported by the Commerce Department, was even weaker than the sluggish 2.5 percent rate in the last quarter of 2006.

The main culprit in the slowdown: the housing slump, which made some businesses act cautiously. The bloated U.S. trade deficit with other nations also played a role.

Consumers largely carried the economy in the first quarter, but many analysts question whether that will continue.

"The No. 1 question is, can the consumer continue to play Atlas while the housing market crumbles around him?" said Richard Yamarone, an economist at Argus Research in New York. Others worry about businesses' appetite to spend and invest, also important for a healthy economy.

The reading on gross domestic product in the first quarter was the weakest since a 1.2 percent pace in the opening quarter of 2003. GDP measures the value of all goods and services produced within the United States, and is considered the best barometer of the country's economic fitness.

The performance was even weaker than the 1.8 percent economists had forecast.

Even though the economy slowed in the first quarter, inflation picked up. An inflation gauge tied to the GDP report and closely watched by the Federal Reserve showed that core prices - excluding volatile food and energy costs - rose at a rate of 2.2 percent in the first quarter, up from 1.8 percent in the fourth quarter.