WASHINGTON -- The U.S. economy slowed to a moderate 2.3 per cent annual growth rate in the first quarter as consumer spending turned in the weakest performance in nearly five years.

Still, the January-March increase came in better than expected and was enough to propel growth over the past year to come close to the 3 per cent goal set by the Trump administration.

The Commerce Department reported Friday that the gain in the gross domestic product, the economy's total output of goods and services, followed a 2.9 per cent rise in the fourth quarter and gains above 3 per cent in the previous two quarters. It was the strongest nine-month stretch in a decade.

Many economists had forecast that growth would slip below 2 per cent in the first quarter, reflecting a big pullback by consumers after a torrid pace of spending in the fourth quarter. They expect growth to surpass 3 per cent in the current quarter.

Consumer spending, which accounts for 70 per cent of economic activity, decelerated sharply from a 4 per cent growth rate in the fourth quarter to a 1.1 per cent pace in the first quarter. That was offset somewhat by gains in inventory building by businesses and a lower trade deficit.

Analysts viewed the first quarter slowdown as temporary, with consumers expected to boost their spending amid a low unemployment rate and the initial impact of the $1.5 trillion in tax cuts that Congress approved in December.

Over the past four quarters, GDP growth has averaged 2.9 per cent, just below the 3 per cent projection the administration used in its budget for next year.

While the administration expects the economy to grow at rates of 3 per cent for the rest of this decade, private analysts are less optimistic. They say that growth will be bolstered by the tax cuts and increased government spending for this year and next year. But then they expect growth levels to return to the lacklustre rates of around 2 per cent as the boost from the government stimulus wears off and the economy starts to feel the adverse effects of rising interest rates.

The Federal Reserve is expected to keep raising its key interest rates to prevent unwanted inflation, and big federal budget deficits are likely to push up government borrowing costs.