The American economy grew at its slowest pace in two years during the first quarter, the government reported Thursday, as business spending faltered and the trade deficit widened.

　　The gross domestic product, the broadest measure of goods and services produced in the United States, grew at an annual rate of 3.1 percent, to $187.9 billion, compared with forecasts for growth of 3.5 percent. That was its weakest performance since the first quarter of 2003, when it rose 1.9 percent.

　　The Commerce Department report was the latest in a series that has suggested that growth would be slower in the second quarter.

　　But the data Thursday on growing inventories and rising prices indicated that the downturn might be worse than expected, some analysts said.

　　Growing inventories accounted for 1.2 percentage points in the overall 3.1 percent rise in GDP, suggesting that companies would cut production in the second quarter.

　　"I think you've got to interpret it with yesterday's durable goods numbers," which fell in March for the third month in a row, said David Wyss, chief economist at Standard & Poor's. "That drop in orders suggests that the second quarter may be even worse."

　　While consumers provided much of the growth in spending, largely by buying food and medical care, their expenditures expanded only 3.5 percent in the quarter, compared with 4.2 percent in the prior three months.

　　Meanwhile, both business and consumers may spend less in response to a rise in prices, which in the quarter amounted to 3.3 percent, their biggest gain since the start of 2001, largely because of higher oil prices. But even excluding the volatile food and energy sectors, inflation jumped 3.1 percent - the most since the first quarter of 1992 - after already having risen 2 percent the previous quarter.

　　"I'm not going to say it's runaway inflation, but I think it's more than people recognized," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

　　As a result, the Federal Reserve may resist raising short-term interest rates at a quicker pace than it is doing now. It has raised the benchmark federal funds rate on overnight bank loans by a quarter-point seven times since June of last year, to 2.75 percent, but Wall Street analysts have been concerned that the Fed might be considering a half-point rise.

　　"Certainly with this weak growth, you're not going to see any acceleration in rate hikes," Wyss said.

　　Considered advance estimates, the figures released Thursday rely on data that are incomplete or subject to revision. Numbers based on additional data will be issued May 26.

　　Net exports subtracted 1.5 percentage points from GDP as imports soared nearly 15 percent, their steepest rise since late 2003, substituting for production at home and offsetting a 7 percent surge in exports.

　　"However, we continue to expect a pickup in GDP growth in the second half of the year," David Greenlaw, chief economist at Morgan Stanley, wrote in a research note. "Of course, this assumes that energy prices have peaked."