WASHINGTON (MarketWatch) — The U.S. economy sputtered in the first quarter, expanding at the slowest pace in two years as business slashed investment by the steepest amount since the Great Recession.

Gross domestic product, the sum of a nation’s economy, slowed to a 0.5% annual growth rate in the first three months of 2016, the government said Thursday. The U.S. had grown 1.4%, 2% and 3.9% in the prior three quarters.

The dismal performance in the first quarter, however, is unlikely to carry over in the spring, most economists contend. They view the labor market as a better indicator of where the economy is headed than the more backward-looking GDP report and they point to strong job creation early in the year as evidence that growth is stable.

The case for a spring rebound will get the first big test next week when the government issues the employment report for April. Economists predict an increase of around 200,000 new jobs, matching recent gains. Only a big shortfall in new jobs is likely to set off alarms about the second quarter.

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Economists polled by MarketWatch predict the economy will speed up to a 2.6% annual clip in the spring, typically the fastest growing quarter of the year. The same pattern occurred in both 2015 and 2014.

Whatever the case, the first quarter sure wasn’t pretty.

Export-heavy manufacturers facing a tougher global sales environment and U.S. energy producers coping with cheap oil led a corporate retreat in the January-to-March period. Companies cut spending on structures such as mining rigs by nearly 11% and investment in new equipment fell by 8.6%, the biggest drop since the waning stages of the 2007-2009 downturn.

After stocking up too much last summer, companies have slowed production to get inventories back in line. The value of inventories rose by just $60.9 billion in the first quarter, the smallest amount in two years, according to the government’s preliminary estimate of GDP. Two more updates will issued over the next two months.

Many economists doubt business investment will show much strength in 2016. A tepid global economic scene and a tumultuous U.S. presidential election marked by heavy anti-corporate rhetoric appears to have made business executives more cautious.

The sour global outlook was evident in U.S. trade relations. Exports slid 2.6% in the first quarter, while imports rose 0.2%. A bigger trade deficit subtracts from GDP.

“The now familiar headwinds from weak global growth, a strong dollar and depressed oil and gas activity weighed severely on trade and business investment,” said Greg Daco, head of U.S. macroeconomics at Oxford Economics. “Businesses continued to work off well provisioned inventories.”

The saving grace once again were consumers, though even they cut back on spending. Households boosted spending by a modest 1.9% — the softest in a year — with much of the increase going toward utilities and health care. Outlays on big-ticket items such as new cars, TVs and appliances, known as durable goods, fell 1.6%.

Instead of splurging, consumers increased their rate of savings instead to 5.2% from 5% at the end of 2015. Stronger household finances, however, are seen by economists as a sign of health that supports the view that consumers can spend more and keep the economy churning forward.

Housing is another key driver of the current seven-year-old economic expansion. The influx of new jobs and more people working has triggered an increase in home sales and spurred home builders to accelerate work.

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Investment in new housing jumped 14.8%, the strongest pace in almost four years. Once those homes are sold, homeowners need to buy plenty of consumer goods to furnish them, economists point out.

Meanwhile, inflation as measured by the Federal Reserve’s preferred PCE index rose at a scant 0.3% annual rate in the first quarter.

Yet the core rate that excludes food and energy climbed 2.1%, up from 1.3% in the prior quarter. That pickup in core inflation could move the Fed closer to its next interest-rate hike later in the year.