Economy Not Quite So Bad in 1Q, Revised to 0.2 Percent Contraction

WASHINGTON (Los Angeles Times/TNS) -

The stumble in economic growth in the first quarter of the year wasn’t quite as bad as earlier estimated, according to the latest and final revision by the Commerce Department.

Gross domestic product, the key measure of economic activity, decreased at a 0.2 percent annual rate from January through March, the department said Wednesday.

That was an improvement over the 0.7 percent contraction reported last month but still down sharply from 2.2 percent growth in the fourth quarter last year.

The latest estimate of first-quarter growth was in line with analyst forecasts. The Commerce Department said exports fell less than in the second estimate released in May, while imports and consumer spending had larger increases.

Still, the contraction was a disappointment in a year that many economists hoped would show increased growth from the tepid pace of the recovery from the Great Recession.

Caused largely by unusually bad winter weather and the labor dispute at West Coast ports, the first-quarter contraction was just the third since the recession ended six years ago this month.

With those problems over, the economy is forecast to grow about 2 percent in the second quarter.

The Commerce Department said first-quarter consumer spending was stronger than estimated last month, revised to a 2.1 percent increase from a 1.8 percent increase, though that was less than half the 4.4 percent rise in consumer spending in last year’s final three months.