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US GDP 'expected to grow by 3%'

The US economy likely improved in the first quarter after strong consumer spending, according to a Reuters poll of economists.

However, the survey also found momentum is already slowing down and could decrease even further after the automatic government spending cuts roll out.

The poll showed that gross domestic product (GDP) likely expanded at a three per cent yearly rate after growth stalled at 0.4 per cent in the fourth quarter of 2012.

According to the economist, a large chunk of the acceleration will reflect the fact many farmers filled up silos after a drought drastically reduced crop output. They claimed that with this factor removed, growth would stand at just two per cent.

The upcoming GDP report is expected to show contributions to growth from all areas of the economy, with the only exceptions being government, trade and investment by businesses in offices.

Consumer spending, which accounts for more than two-thirds of US economic activity, is expected to have increased at around a three per cent pace, which would be its fastest since at least the first quarter of 2011.

By Asim Shah