Economy shrinks 5.7 pct. in 1st quarter
WASHINGTON — The economy sank at a 5.7 percent pace in the first quarter as the brute force of the recession carried over into this year. However, many analysts believe current economic activity isn’t shrinking nearly as much.
The Commerce Department’s updated reading on gross domestic product, released Friday, showed the economy’s contraction from January to March was slightly less deep than the 6.1 percent annualized decline first estimated last month. But the new reading was worse than the 5.5 percent annualized drop economists were forecasting.
It was the second straight quarter where the economy took a huge tumble. At the end of last year, the economy shrank at a 6.3 percent pace, the most in a quarter-century.
The economy’s performance over the last two quarters underscored the toll the recession, which started in December 2007 and is now the longest since World War II, has had on the country. Businesses have ratcheted back spending and slashed 5 pay day loans no credit check.7 million jobs to survive the fallout.
Weakness in the first quarter mostly reflected massive cuts in spending by businesses on home building, equipment and software and many other things. U.S. exports plunged, as did spending on commercial construction and inventories. But some of those drops were smaller than first estimated, contributing to the tiny upgrade in overall first quarter GDP.
Economists are hopeful that the economy isn’t shrinking nearly as much in the April-to-June quarter as the recession eases its grip.
Forecasters at the National Association for Business Economics, or NABE, predict the economy will contract at a 1.8 percent pace in the current quarter. Other analysts, however, think the economic decline could be steeper — around a 3 percent pace.
Filed under: money by Wolf