WASHINGTON (AP) — U.S. economic growth likely accelerated from January through March from a near-stall at the end of 2012, propelled by a revival in housing, steady consumer spending and increased stockpiling by businesses.
But the faster growth isn't expected to last. Broad government spending cuts and higher taxes have begun to weigh on the economy, making some consumers and businesses cautious and slowing growth.
Economists predict that the overall economy grew at an annual rate of 3.1 percent in the January-March quarter, according to a survey by FactSet. That would be a significant improvement from the anemic 0.4 percent growth rate reported for the October-December quarter.
A 3.1 percent growth rate would match the robust pace of the July-September quarter last year. Anything stronger than 3.1 percent would be the economy's fastest quarterly growth since late 2011.
The Commerce Department will release the report at 8:30 a.m. EDT Friday.
Many economists say they think growth as measured by the gross domestic product is slowing in the April-June quarter to an annual rate of just 2 percent. Most foresee growth remaining weak before picking up in the fourth quarter.
GDP is the broadest gauge of the economy's health. It measures the total output of goods and services produced in the United States, from haircuts and hamburgers to airplanes and automobiles.
The economy began the year with a big push from the private sector. Steady job gains kept consumers spending. Residential construction rose at the fastest annual pace in nearly five years. And healthy auto sales kept factories bustling.
But now two big decisions in Washington are threatening to slow the economy's momentum.
In March, lawmakers allowed deep across-the-board spending cuts to begin taking effect. The cuts have forced government agencies to furlough workers, reduced spending on key public projects and made businesses more nervous about investing and hiring this year.
The cuts came two months after President Barack Obama and Congress allowed a Social Security tax cut to expire. That left a person earning $50,000 a year with about $1,000 less to spend this year. A household with two high-paid workers has up to $4,500 less.
Consumers' take-home pay is crucial to the economy because their spending drives roughly 70 percent of growth.
Americans appeared to shrug off the tax increase at the start of the year. They boosted spending in January and February, helped by a stronger job market. In part, that's why growth is expected to be solid in the first quarter.
But hiring slowed sharply in March. And consumers cut back their spending at retail businesses, a sign that many were starting to feel the tax increase. Economists expect spending to stay weak in the second quarter as consumers adjust to their smaller paychecks.