What don't you like to see in an economic recovery? You don't like to see GDP growth cut nearly in half from one quarter to the next. Unfortunately, that's what we saw in the first quarter of 2011, when annualized GDP growth was just 1.8%, down from 3.1% in the fourth quarter of 2010. What went wrong?

First, the chart, based on the data from the Bureau of Economic Analysis:

The disappointing result can be summed up rather easily: Americans' shopping didn't increase much, net export growth was flat, and the government spent less. Although consumer spending on services continued to grow at a similar rate as in Q4, their purchases of goods grew about half as quickly as in the prior quarter. Exports and imports both grew modestly, but imports grew slightly faster, keeping net export growth flat. Finally, federal government spending was flat, while state and local government spending fell.

The only real positive result was that business spending ramped up. It had declined significantly in the fourth quarter. In the early part of 2011, however, it jumped at an annualized pace of $36 billion. This was due in large part to firms replenishing their inventories and purchasing more equipment and software, despite spending less on structures.

Should the decline in growth concern us? Well, it's hard to spin it in a positive way. There are two potential temporary causes. The decline in government expenditures was due in part to a decline in national defense spending. Net exports were likely flat due in part to weakened global demand due to instability. If federal government spending bounces back and global unrest calms, then these numbers could rebound a bit. But the decline in consumer spending growth is certainly a concern. If strong demand isn't observed by firms, they won't hire more aggressively.