Consumer spending boosts 1Q growth 3.2 percent

WASHINGTON - Consumers spent more and helped lift the economy last quarter but not enough to ignite the recovery and drive down unemployment.

Spending by consumers rose by the fastest pace in three years, the Commerce Department said Friday. That helped the economy grow at a 3.2 percent pace in the January-to-March quarter. It marked the third straight quarterly gain as the United States heals from the longest and deepest recession since the 1930s.

Still, growth was weaker than in the fourth quarter of last year, when the economy grew at 5.6 percent. The first-quarter's performance would normally be considered respectable in normal times. Yet, to come out of the severe recession more robust growth is needed to drive down high joblessness, stimulate wage increases and lift consumer spending.

Economic growth would have to equal 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.

In a Rose Garden statement, President Barack Obama said more jobs are still needed, but he called the quarterly report "an important milepost on the road to recovery."

Adding more uncertainty to the U.S. economy is the spreading European debt crisis. Greece on Friday heralded drastic new cuts and tax increases to win rescue loans from its European partners and the International Monetary Fund - and avoid a disastrous default on government debt.

Greece, the European Union and the IMF are expected to complete talks this weekend over what extra steps Athens must take as a condition of the rescue.

Consumers managed to increase spending at a 3.6 percent pace in the first quarter. It was the strongest showing since early 2007 - before the economy tipped into a recession. That marked a big improvement from the fourth quarter, when consumer spending grew at a lackluster 1.6 percent pace.

Shoppers spent more on home furnishings and household appliances, recreational goods and vehicles, clothing and at bars and restaurants.