WASHINGTON —The bruised economy limped through the first quarter, growing at just a 0.6 percent pace as housing and credit problems forced people and businesses alike to hunker down.

The country's economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday. The statistic did not meet what economists consider a definition of a recession, which is a contraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if slightly.

Many analysts were predicting the gross domestic product would weaken a bit more — to a pace of just 0.5 percent — in the first quarter.

"The economy is weak but not collapsing," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "A recession can't be ruled out, although the stars are not lined up at this point to definitively say one way or the other."

Voters are keenly worried about the country's economic problems and so are politicians — in Congress, in the White House and on the campaign trail.

White House press secretary Dana Perino said the administration was disappointed in the figures. "This is nothing to crow about," she said. "It is very slow growth, but it is growth nonetheless."

The housing situation turned more bleak in the first quarter, as record-high foreclosures dumped more unsold homes on the market, adding to builders' headaches. Builders slashed spending on housing projects by 26.7 percent on an annualized basis.

Consumers become cautious

Consumers — whose spending is vital to the country's economic health — turned much more cautious, also restraining overall economic growth in the first quarter. Their spending rose at just a 1 percent pace. That was down from a 2.3 percent growth rate and was the slowest since the second quarter of 2001. Shoppers cut spending on such things as cars, furniture, household appliances, food and clothes.

The credit crunch also has made it harder for people to finance big-ticket items, such as cars and homes.

Another report Wednesday, this one from the Labor Department, showed that workers' compensation — including wages and benefits — grew 0.7 percent in the first quarter, the slowest pace in two years. Many economists were expecting a 0.8 percent rise. The report suggests the weak labor market is making employers a bit less generous with their compensation.

Businesses, meanwhile, reduced spending on equipment and software at a 0.7 percent pace, the most since the final quarter of 2006. And, they trimmed spending on commercial construction at a 6.2 percent pace, the most since the third quarter of 2005.

However, growth in businesses' inventories of supplies was a big force adding to GDP. That could reflect both stronger foreign demand for U.S. merchandise and weaker domestic sales, analysts said. Exports of U.S. goods and services, which increased at a 5.5 percent pace, also helped first-quarter growth.

Gas prices adding to inflation

To bolster the economy, the Federal Reserve lowered a key interest rate by one-quarter percentage point to 2 percent Wednesday. That marked a more moderate-sized rate reduction after a recent string of hefty cuts. Many economists believe the Fed, which started dropping rates last September, may be nearing the end of its rate-cutting campaign because policymakers don't want to aggravate inflation.

An inflation measure linked to the GDP report showed that prices grew at a rate of 3.5 percent in the first quarter, down from a 3.9 percent pace in the prior quarter.

Another gauge showed that the core prices excluding food and energy rose at a rate of 2.2 percent in the first quarter. That was a lower than the 2.5 percent pace registered in the fourth quarter but still outside the Fed's comfort zone. The upper level of the Fed's inflation tolerance is 2 percent.

Gas and food prices, however, have moved higher since the start of the year, adding to inflation pressures.

A growing number of economists believe the economy is in a recession and is indeed contracting now.

Under one rough rule, if the economy contracts for six straight months it is considered to be in a recession.

Unemployment soars

During the first three months of this year, job losses neared the staggering quarter-million mark. The unemployment rate has climbed to 5.1 percent and is expected to move higher in the coming months.

President Bush on Tuesday said the country was dealing with "difficult times."

Democrats in Congress insist more relief needs to be provided, including additional unemployment benefits to cushion the pain of joblessness.