The economy shrank at an annualised rate of 2.9% in the first three months of the year, the third estimate from the US Commerce Department showed.

 

This was worse than the previous estimate of a 1% contraction¹, and also worse than economists²' expectations.

 

However, the economy is expected to have recorded a sharp recovery during the second quarter of the year.

 

The White House said the figures showed the economic recovery was still in progress, but added other indicators³ for April and May suggest a rebound⁴ in the second quarter.

 

 

The unusually cold weather in the first quarter of the year has been blamed for the poor performance of the economy.

 

However, the gap between the second and third estimates of US growth for the quarter was the largest on record.

 

The latest revision came as a result of a weaker pace of healthcare spending than previously⁵ assumed, which caused a downgrading of the consumer spending estimate. 

 

Consumer spending - which is responsible for more than two-thirds of US economic growth - increased by 1% in the quarter, rather than the 3.1% rate as first estimated.

 

Trade was also a bigger drag on the economy than previously thought, with exports falling by 8.9% rather than a previously estimated 6%.

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