The US economy slowed down sharply while inflation accelerated in the first three months of the year, the government reported on Friday, again sparking off anxiety that the nation might be sliding into a more serious downward spiral. The US Commerce Department in its preliminary report on economic growth reported the nation’s gross domestic product had expanded 1.3 percent in the first three months of the year, marking the slowest rate since the first quarter of 2003, and just about more than half the 2.5 percent rate reported in the last quarter of 2006. The housing depression was the single biggest factor working on the country’s economic growth, as it has been for the last year. Home construction dropped by 17 percent at an annual rate, establishing the sixth uninterrupted quarter of decline. At the same time businesses also reduced their inventories, exports deteriorated and military spending by the government also took a downward trend. However, the American consumer continued to spend freely and helped keep the economy moving forward. Analysts are closely following the trend of consumer spending as they most worries about the strength of consumer spending, which constitutes for 70 percent of the economy and which kept the economy somewhat buoyant by rising at a healthy 3.8 percent annual rate in the first quarter. But market analysts, including those at the Federal Reserve, anticipate the economy to strengthen up enough to grow at a modest pace through the rest of the year without plunging into a recession. At the same time, they are anticipating increasing threats that the economy will weaken further, probably into a stretched out period of high inflation and weak growth. Experts have also argued that the consumer spending might not be able to continue following the problems in the housing sector, the continuing enlargement in the trade gap and the nation’s negative savings rate, where consumers are consistently spending more than their after-tax income. The recently released report also showed growing inflation pressures despite of slower growth, an aspect that could restrict the Federal Reserve’s choice to cut interest rates in an effort to ward off a slowdown or even a full-blown recession.