GDP Sputters to 1 1/2-Year Low, Brightening Predictions

WASHINGTON —  Economic growth during the first three months of this year sputtered to its slowest pace in 1 1/2 years, the Commerce Department reported Wednesday, and it said there is no sign that second-quarter figures will be any higher.

The department revised its gross domestic product growth estimate downward to an annual rate of 2.7% for January through March. The figure published a month ago was 2.8%.

That rate is barely more than half the brisk 5.1% recorded for the fourth quarter of last year. It is also the slowest annual rate reported since the third quarter of 1993, when it also was 2.7% annually.

The department said companies boosted inventories less than the government had estimated a month ago on evidence of slightly stronger consumer spending and more vigorous business investment.

Analysts said that although the economy will probably prove to be even more sluggish in the current quarter, the new figures are encouraging and point to moderate growth and low inflation.

“It’s good news. It probably means we’re going to enjoy the economy as we see it for some time,” said David Munro of High Frequency Economics, a New York City forecasting firm.

Separately, purchasing managers in the Chicago area said their Chicagoland Business Barometer fell in May to a seasonally adjusted 53.5 from 57.6 in April, as new orders and backlogs of unfilled orders shrank.

Both the consumer and industrial sectors appear to be cooling.

Another report released Wednesday, also from the Commerce Department, says new-home sales fell in April despite milder weather and cheaper mortgages.

They fell 2.7% last month from March, to a seasonally adjusted annual rate of 580,000. Sales were 13.7% below the April, 1994, pace of 672,000.