Economy Shrinks Faster Than Expected in 1st Quarter

6.1% pace fueled by biz cutbacks, export drop
By Newser Editors and Wire Services
Posted Apr 29, 2009 8:13 AM CDT
In this April 17, 2009 file photo, Commerce Secretary Gary Locke speaks at the University of Arkansas-Little Rock in Little Rock, Ark.    (AP Photo/Danny Johnston)
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(Newser) – The US economy shrank at a worse-than-expected 6.1% pace at the start of this year as sharp cutbacks by businesses and the biggest drop in US exports in 40 years overwhelmed a rebound in consumer spending. Today's Commerce Department report dashed hopes that the recession's grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters had expected a 5% annualized decline.

Instead, the economy ended up performing nearly as badly as it had in the final three months of last year, when it logged the worst slide in a quarter-century, contracting at a 6.3% pace. The first-quarter consumer rebound, the strongest in 2 years, was swamped by heavy spending cuts in virtually every other area.