GDP revised upward

WASHINGTON -- The economy plodded ahead at a 0.9 percent pace in the first quarter -- slightly better than first estimated -- but still underscoring caution on the part of consumers and businesses walloped by housing, credit and financial problems.

The new reading on gross domestic product, released by the Commerce Department on Thursday, was an improvement from the government's initial growth estimate for the January-to-March quarter as well as the economy's performance in the final quarter of last year. Both periods were pegged at a 0.6 percent growth rate.

Gross domestic product, or GDP, measures the value of all goods and services produced within the United States.

The first-quarter performance matched analysts' forecasts and offered a somewhat encouraging sign because it showed the economy was still growing at that time. The figure didn't meet a definition of recession, which under a rough rule is two straight quarters of shrinking GDP, and might raise hopes the country can dodge a full-blown downturn.

Fallout from the housing crisis continued to be a big drag on overall economic growth.

Builders slashed spending on housing projects by 25.5 percent, on an annualized basis, in the first quarter. That was the most in 27 years.

Consumers -- whose spending is the economy's lifeblood -- are feeling the pressure from the economy's problems.

They increased spending at just a 1 percent pace in the first quarter. That was the slowest since the last recession in 2001. Consumers are pulling back as high energy and food prices leave them with less money to spend on other things. Falling home values are making many homeowners feel less wealthy and less inclined to spend. And, the credit crunch has made it harder to finance big-ticket purchases.

"Consumers are hurting," said Ken Mayland, president of ClearView Economics.

Businesses also showed some caution, cutting spending on equipment and software. However, investment in commercial construction wasn't as weak as the government first estimated, contributing to the upward revision to first-quarter GDP.

One of the bright spots keeping the economy afloat in the first quarter was export growth. Exports grew at a 2.8 percent pace. Although that was not nearly as much as first estimated, exports still were a force for GDP growth. The falling value of the U.S. dollar has made U.S. exports less expensive to foreign buyers.