WASHINGTON -- The economy grew at a slightly stronger pace than forecast as 2008 began, helped by inventory-building that tempered a steadily deteriorating housing sector and less vigorous consumer spending.

The Commerce Department said on Wednesday that gross domestic product or GDP expanded at a 0.6 percent annual rate in the first quarter, matching the fourth quarter's advance and handily topping a forecast for 0.2 percent growth in an advance poll of economists by Reuters.

GDP is the broadest measure of total economic activity within U.S. borders and, despite a better-than-expected first-quarter performance, details of the report reflect widespread weakening that many analysts fear will lead to a recession.

The GDP figures are an initial measure of first-quarter performance and will be revised twice in coming months.

The report was issued just before Federal Reserve policy-makers began a second day of deliberations that is expected to result in a decision to trim official interest rates another quarter percentage point to try to keep expansion going.

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A Fed announcement of its decision, which may include a signal that it will halt its rate reduction campaign, will be issued in early afternoon.

Consumer spending that fuels two-thirds of economic activity through consumption of goods and services, grew at the weakest rate since the second quarter of 2001, when the economy was last in recession. It rose at a 1 percent rate after growing 2.3 percent in the fourth quarter.

The weakening in an already distressed housing sector was even more striking. Spending on residential construction plunged at a 26.7 percent rate — a ninth straight quarterly decline and the biggest for any three months since the end of 1981.

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