U.S. Economy Shrinks by Most in Five Years

For WSJ, Jonathon House reports: Weather disruptions at home and weak demand abroad caused a contraction of rare severity in the U.S. economy in the first quarter, renewing doubts about the strength of the nation’s five-year-old recovery.

Gross domestic product, the broadest measure of goods and services produced across the economy, fell at a seasonally adjusted annual rate of 2.9% in the first quarter, the Commerce Department said in its third reading of the data Wednesday.

That was a sharp downward revision from the previous estimate that output fell at an annual rate of 1%. It also represented the fastest rate of decline since the recession, and was the largest drop recorded since the end of World War II that wasn’t part of a recession.

To be sure, many signs since March, including reports of growth in consumer spending, business investment and hiring, indicate the first quarter doesn’t mark the start of a new recession. And revisions in future years could alter the first-quarter figure.

J.P. Morgan Chase economist Michael Feroli described the decline as “mostly a confluence of several negative, but mostly one-off, factors.”

But the severity of the drop, he said, “calls into question how much vigor there is in the pace of activity” going forward…(read more)

WSJ

Write to Jonathan House at jonathan.house@wsj.com


One Comment on “U.S. Economy Shrinks by Most in Five Years”

  1. […] By Pundit from another Planet For WSJ, Jonathon House reports: Weather disruptions at home and weak demand abroad caused a contraction of rare severity in the U.S. economy in the first quarter, renewing doubts about the strength of the nation’s five-year-old recovery. Gross domestic product, the broadest measure of goods and services produced across the economy, fell at a seasonally adjusted annual […] Like this? Read more and get your own subscription at […]


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