US economy contracted in first quarter as expectedThursday 29 May 2014 15.43
The US economy contracted in the first quarter for the first time in three years, new figures show.
The economy has been buckling under the weight of a severe winter, but there are signs activity has since rebounded.
The Commerce Department revised down its growth estimate to show gross domestic product shrinking at a 1% annual rate.
It was the worst performance since the first quarter of 2011 and reflected a far slower pace of inventory accumulation and a bigger than previously estimated trade deficit.
The government had previously estimated GDP growth expanding at a 0.1% rate.
It is not unusual for the government to make sharp revisions to GDP numbers as it does not have complete data when it makes its initial estimates.
The decline in output, which also reflected a plunge in business spending on non residential structures, was sharper than Wall Street's expectations.
Economists had expected the revision to show GDP contracting at a 0.5% rate.
The economy grew at a 2.6% pace in the fourth quarter.
US financial markets are likely to shrug off the report, given the temporary factors that weighed down on growth and the fact that economic activity is rebounding.
Data ranging from employment to manufacturing suggests growth will accelerate sharply in the second quarter.
Economists estimate severe weather could have chopped off as much as 1.5% from GDP growth.