Expectations of 3 percent growth are missed because of defense cuts, among other things.
U.S. economic growth accelerated to an annual rate of 2.5 percent from January through March, buoyed by the strongest consumer spending in more than two years. Government spending fell, though, and tax increases and federal budget cuts could slow growth later this year.
The Commerce Department said today that the economy rebounded from an anemic 0.4 percent annual growth rate in the October-December quarter. Much of the gain reflected a jump in consumer spending, which rose at an annual rate of 3.2 percent. That was the biggest such jump since the end of 2010.
Growth was also helped by businesses, which responded to the greater demand by rebuilding their stockpiles. And home construction rose further.
But government spending fell at a 4.1 percent rate, led by another deep cut in defense spending. The decline kept last quarter's increase in economic growth below expectations of a 3 percent rate or more.
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 around that subpar level for the rest of the year.
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.