Limp First Quarter May Be Omen for the Year

Business shows little signs of investment or hiring

The U.S. economy expanded at a 2.5% pace in Q1, the Commerce Department said Friday, missing forecasts. But that may be as good as it gets in 2013 as businesses see little reason to ramp up investment and hiring.

Analysts expected an annualized GDP gain of 3.1%, though it was still a big improvement over Q4's 0.4%.

Consumer spending growth accelerated to 3.2% from 1.8% despite higher payroll taxes. Inventories recovered, and the decline in government spending eased to 4.1% from 7%.

But business investment's pace slowed to 2.1% from 13.2%, foreign trade was a bigger drag, and growth excluding inventories worsened to 1.5% from 1.9%.