U.S. economy shrinks 2.9% in Q1

U.S. economy shrinks 2.9% in Q1Painting a bleak picture of the U. S. economy, the Commerce Department disclosed that the world's biggest economy shrank at a drastic year-on-year rate of 2.9 per cent in the first quarter of this year.

The new figure is roughly three times lower than May's preliminary estimate of 1 per cent shrinkage in the economy. Earlier, in April, an analysis of compiled data had projected a modest growth of 0.1 per cent for the economy.

Initially, analysts attributed the economy's sluggishness to an unusually cold winter, but fresh data, which represents the largest difference between second and third estimates in nearly four decades, indicates that the economy is suffer far greater problems.

Economist Peter Morici said a number of factors were responsible for the economy's lousy performance. He added that there were reasons for concern.

Commenting on the fresh figure of contraction in the economy, Morici said, "Businesses scaled back their investment, and that is a bit foreboding. They just don't believe the president's ballyhoo about this being a breakout year."

The latest figure marks the worst performance for the U. S. economy's three-month period since 2009. However, it is not the final figure as the Commerce Department's Bureau of Economic Analysis will readjust it once more next month when it will make historical revisions.