It’s worse than we thought.
The US economy shrunk at a much larger rate than previously estimated in the first quarter. The GDP fell by 2.9%, the economy’s worst performance since the Great Recession.
"It marked the second biggest downward revision from the agency's second GDP estimate since records began in 1976," #GDP
— John LaRosa (@jslconsulting) June 25, 2014
The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly.
The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month.
While the economy’s woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather. Growth has now been revised down by a total of 3.0 percentage points since the government’s first estimate was published in April, which had the economy expanding at a 0.1 percent rate.
The difference between the second and third estimates was the largest on records going back to 1976, the Commerce Department said.
Economists had expected growth to be revised to show it contracting at a 1.7 percent rate. Sharp revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates.
The latest revisions reflect a weaker pace of healthcare spending than previously assumed.