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.