The economy sank at a 5.7% pace as the brute force of the recession carried over into the start of the year. However, many analysts believe activity isn’t shrinking nearly as much now as the downturn flashes signs of letting up. The Commerce Department’s updated reading on gross domestic product, released today, showed the economy’s contraction from January to March was slightly less deep than the 6.1% annualized decline first estimated last month. But the new reading was a tad worse than the 5.5% annualized drop economists were forecasting.
It was a grim first-quarter performance despite the small upgrade. It marked the second straight quarter where the economy took a huge tumble. At the end of last year, the economy shrank at a staggering 6.3% pace, the most in a quarter-century.
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, so did spending on commercial construction and inventories. But some of those drops — while huge — were a bit less than first estimated, contributing to the tiny upgrade in overall first quarter GDP.
