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US economy fell at steep rate in first quarter, officials say

(File) (Scott Olson, Getty Images)
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Updated: 6/25 10:41 am

WASHINGTON (AP) — The U.S. economy receded at a steep annual rate of nearly three percent in the January-March quarter, as a harsh winter contributed to the biggest contraction since the depths of the recession five years ago.

But the setback is expected to be temporary, with growth rebounding solidly since spring.

The Commerce Department said the first-quarter contraction was even more severe than the one percent annual decline it estimated a month ago. Two-thirds of the downward revision reflected a decline in health care spending. 

Another major factor was a bigger trade deficit than initially estimated.

Despite the plunge in economic activity last quarter, many analysts think the economy is expanding at a strong rate approaching four percent growth in the current second quarter.

©2014 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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