U.S. Economy Shrinks by Most in Five YearsPosted: June 25, 2014
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)
Write to Jonathan House at email@example.com
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