NEW YORK (Reuters) - The US economy is expected to expand at about a 2 per cent rate in 2016 as a drag from net exports offsets growth in consumer spending and a recovery in business investments, the New York Federal Reserve's economic staff said on Friday (April 15).

The forecast growth for US gross domestic product, while above its potential rate of about 1.75 per cent, was lower than the staff's estimate of 2.5 per cent last year.

The group saw a "sluggish" first quarter and anticipated gross domestic product to accelerate at a 2.5 per cent pace during the rest of the year.

In a separate report released on Friday, the New York Fed downgraded its first-quarter GDP outlook to a 0.8 per cent from 1.1 per cent forecast a week ago.

Still, the domestic jobless rate should decline to 4.75 per cent by year-end, N.Y. Fed economists Jonathan McCarthy, Richard Peach and Robert Rich said in a blog post on Friday.

The unemployment rate rose to 5.0 per cent in March from 4.9 per cent in February as more workers sought jobs in a steadily improving labor market.