U.S. Economy Contracted in 1Q for Second Straight Year

The economy performed worse than initially estimated in the first quarter, contracting for the second straight year and just the third time since the Great Recession, as factors including severe weather and a West Coast ports dispute smothered growth.

Total economic output, also known as gross domestic product, decreased at a 0.7 percent annual rate from January through March, the Commerce Department said Friday.

In its initial estimate last month, the government said the economy expanded at a 0.2 percent annual rate. That was a sharp decline from the 2.2 percent annualized growth in the fourth quarter.

Additional data since then led many economists to forecast the Commerce Department would revise its figures to show the economy actually contracted.

Two consecutive quarterly contractions generally signal a recession. But economists expect growth to return in the second quarter, with the economy expanding at about a 2 percent annual rate.

Friday’s economic-growth estimate, the second of three done each quarter, was in line with analyst expectations of a 0.8 percent contraction.

Still, some economists have wondered if the economy really performed as badly as the figures seem to indicate.

They noted that the only three contractions since the Great Recession took place in the first quarters of the year and questioned if the Commerce Department was properly adjusting its estimates for seasonal changes.

This article appeared in print in the June 1st, 2015 edition of Hamodia.