New York: The US economy has slowed more sharply than expected in the first three months of the year, according to the latest GDP report, and is showing the same weak rate of growth as in 2003.

According to the latest quarterly GDP figures, growth is now at 1.3 per cent, just about half the growth rate of the previous three months. It is also well below the 1.8 per cent that economists had forecast.

For the Federal Reserve, the problem is compounded by the fact that figures also suggest swelling inflationary pressures that may prevent the Fed from going in for interest rate cuts in a bid to kick-start the economy.

The American housing market continues to be the mainly responsible for the slowdown, with residential building activity sliding 17 per cent in the quarter. This slide is the sixth straight one in a row and comes on the back of a fall of 19.8 per cent in the fourth quarter.

However, the slow down is yet to undermine consumer sentiment, with first-quarter consumer spending growing at a 3.8 per cent annual rate, down modestly from the 4.2 per cent rate in the previous three months. Consumer spending in the US accounts for two-thirds of national economic activity.

Exports declined at a 1.2 per cent rate in the first quarter, down sharply from a 10.6 per cent advance in the fourth quarter. This also is the first decline since 2003. The decline comes along with unexpected weakness in government spending.