U.S. Economy Shrinks More Than Expected

While most of the major media outlets have been following the directives and talking about how good the economy is doing and how things have "stabilized," Reuters apparently has strayed off topic.

Reuters is reporting today that the U.S. economy contracted at a pace that was steeper than expected during the first quarter of 2009. According to government data released today, the economy is still deep in recession.

Gross domestic product, which measures total goods and services in the U.S. dropped at a 6.1 percent annual rate during the 1st quarter after shrinking 6.3 percent in the fourth quarter of 2008.  Analysts had forecast a GDP falling at a rate of 4.9 percent.

The report from the Commerce Department showed business inventories plummeted by a record $103.7 billion.  Exports collapsed at 30 percent, the biggest decline since 1969, after dropping 23.6 percent in the fourth quarter of 2008. Investments by businesses tumbled a record 37.9 percent. Residential investments dived 38 percent, the biggest decline since 1980. 

As expected, the report said that the government's $787 billion spending splurge approved in February had no impact on the first quarter GDP.