Money & Company
Tracking the market and economic trends that shape your finances.
March 28, 2011 | 6:29 pm

Hopes were high at the start of this year for a hefty first-quarter growth spurt in the U.S. economy.

But some of Wall Street’s biggest banks now are ratcheting back their growth estimates amid disappointing data in recent weeks.

Goldman Sachs economists have been expecting gross domestic product to rise at a real (after-inflation) annualized rate of 3.5% in the first quarter, which would be the fastest pace since the 3.7% growth of the first quarter of 2010.

But on Monday, Goldman warned of “significant downside risk” to its estimate. The reason: Consumers’ real pace of spending has slowed this year.

The government said Monday that personal spending rose 0.7% in February, but that after adjusting for inflation (think: energy and food) the increase was just 0.3%, after a flat reading in January.

Those figures, in turn, imply that real consumer spending for the quarter as a whole will rise at an anemic annualized pace of 1.75% to 2%, Goldman said. That would be a sharp slowdown from the 4% real spending increase of the fourth quarter, when Americans’ mood was brightening.

Now consumer confidence is falling again — although people are much more worried about the future than the present.

Bank of America Merrill Lynch economists, meanwhile, have given up on their original growth estimate for the current quarter.

On Friday, BofA Merrill trimmed its first-quarter GDP growth figure to 2.2%, which if accurate would be the weakest pace since the economy grew 1.7% in last year’s second quarter.

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