By Shobhana Chandra
May 29 (Bloomberg) -- The U.S. economy probably grew in the first quarter at a faster pace than originally estimated as exports rose, economists said before a government report today.
Gross domestic product expanded at an annual pace of 0.9 percent from January through March, up from the 0.6 percent projected last month, according to the median estimate of 74 economists surveyed by Bloomberg News.
Surging fuel and food bills and falling home values signal consumer spending, the biggest part of the economy, is unlikely to accelerate in coming months. Stricter lending, a worsening housing slump and shrinking job market will constrain households and businesses, even as government tax rebates give growth a temporary boost.
The economy ``still faces a host of problems,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. ``The only bright spot is exports.''
While a recession is often described as consecutive declines in GDP, the National Bureau of Economic Research, the official arbiter in the U.S., defines contractions as a ``significant'' decrease in activity over a sustained period of time.
The group says that in a recession, decreases would be visible in payrolls, production, sales and incomes in addition to GDP.
Declines in payrolls and production indicate the odds are better than even that the U.S. is in a recession, said Shapiro. ``Looking at the GDP revisions as an indicator would be missing the forest for the trees.''
Second Estimate
The Commerce Department's revised growth figures are due at 8:30 a.m. in Washington. The report is the second of three estimates. Economists' forecasts ranged from gains of 0.6 percent to 1.3 percent.
Following a 0.6 percent growth rate in the fourth quarter, the projected reading would mark the smallest back-to-back pace of expansion in five years.
A report from the Labor Department, also due at 8:30 a.m., may show the number of workers filing initial claims for jobless benefits rose to 370,000 last week from 365,000 the prior week, according to the Bloomberg survey median.
The revision to economic growth last quarter probably reflected a bigger narrowing of the trade deficit than the government projected on April 30. A cheaper dollar and economic growth overseas are benefiting exports, while slower U.S. demand is limiting imports.
Spending Slows
Consumer spending, which accounts for more than two-thirds of the economy, probably grew at a 1 percent pace in the first quarter, according to the survey median. The gain would be the smallest since the 2001 recession and match last month's advance estimate.
Purchases are likely to slow even more as Americans struggle with surging fuel and food costs, fewer jobs and declining property values. Confidence among consumers fell in May to the lowest level since 1992, the Conference Board reported this week.
Auto sales in April slid to a 14.4 million annual rate, the lowest level since 1998, according to industry figures. Spending this quarter will grow at a 0.5 percent pace, the smallest gain since 1991, according to the median estimate of economists surveyed earlier this month.
Federal Reserve policy makers last month trimmed their economic growth projections for this year by a percentage point to a range of 0.3 percent to 1.2 percent.
`Financial Headwinds'
``A number of participants were of the view that financial headwinds would probably continue to restrain economic activity through much of next year,'' minutes of the Fed's April meeting showed last week. ``The strength of U.S. exports remained a notable bright spot.''
The gain in growth last quarter would have been even larger if not for a reduction in estimates for inventories. A measure of total sales, which strips out stockpiles, will probably be revised to show a gain rather than a decline.
``Not only is the GDP gain likely to be somewhat larger than originally reported, but the mix was likely healthier'' with more growth coming from increases in demand and less from inventories, said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. Still, it was ``an anemic performance,'' he said.
Reports this month showed declines in home building will remain a drag on growth. Builders began work in April on the fewest single-family houses in 17 years, Commerce said earlier this month. Decreases in residential construction have subtracted from growth since the first three months of 2006.
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