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GDP Down 6.1%, Reflecting Continuing Economic Woes
Wednesday April 29, 2009 08:38 AM ET
The U.S. economy contracted at a steeper-than-expected pace in the first quarter, weighed down by sharp declines in exports and business inventories, according government data on Wednesday that showed the economy was still deep in recession.
Gross domestic product, which measures total goods and services output within U.S. borders, dropped at a 6.1 percent annual rate, the Commerce Department said, after shrinking 6.3 percent in the fourth quarter.
Analysts polled by Reuters had forecast GDP falling at a 4.9 percent rate in the January-March quarter. Output has declined for three straight quarters for the first time since 1974-1975.
The advance report from the Commerce Department showed business inventories plummeted by a record $103.7 billion in the first quarter, as firms worked to reduce stocks of unsold goods in their warehouses. That sliced 2.79 percentage points from the overall GDP figure. Excluding inventories, GDP contracted 3.4 percent.
However, declining inventories is a positive development as it suggests the inventory correction cycle might be over.
Exports collapsed 30 percent, the biggest decline since 1969, after dropping 23.6 percent in the fourth quarter. The decline in exports knocked off a record 4.06 percentage points from GDP.
Investment by businesses tumbled a record 37.9 percent in the first quarter, while residential investment dived 38 percent, the biggest decline since the second quarter of 1980.
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GDP Down 6.1%, Reflecting Continuing Economic Woes
Wednesday April 29, 2009 08:38 AM ET
The U.S. economy contracted at a steeper-than-expected pace in the first quarter, weighed down by sharp declines in exports and business inventories, according government data on Wednesday that showed the economy was still deep in recession.
Gross domestic product, which measures total goods and services output within U.S. borders, dropped at a 6.1 percent annual rate, the Commerce Department said, after shrinking 6.3 percent in the fourth quarter.
Analysts polled by Reuters had forecast GDP falling at a 4.9 percent rate in the January-March quarter. Output has declined for three straight quarters for the first time since 1974-1975.
The advance report from the Commerce Department showed business inventories plummeted by a record $103.7 billion in the first quarter, as firms worked to reduce stocks of unsold goods in their warehouses. That sliced 2.79 percentage points from the overall GDP figure. Excluding inventories, GDP contracted 3.4 percent.
However, declining inventories is a positive development as it suggests the inventory correction cycle might be over.
Exports collapsed 30 percent, the biggest decline since 1969, after dropping 23.6 percent in the fourth quarter. The decline in exports knocked off a record 4.06 percentage points from GDP.
Investment by businesses tumbled a record 37.9 percent in the first quarter, while residential investment dived 38 percent, the biggest decline since the second quarter of 1980.
Click HERE to continue reading this article... MUST READ!
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