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US economy continues to decline Slump in exports hits US economy
(20 minutes later)
The US economy continued to contract in the first three months of 2009, official figures have shown. The US economy continued to contract in the first quarter of 2009, led by the biggest fall in exports for 40 years.
US GDP contracted at an annualised rate of 6.1% during the quarter, little improvement on the 6.3% fall in the last three months of 2008.US GDP contracted at an annualised rate of 6.1% during the quarter, little improvement on the 6.3% fall in the last three months of 2008.
The latest economic output figure from the Commerce Department was much worse than analysts had expected. Exports fell by 30%, the Commerce Department said, as the global recession hit worldwide spending.
Most had predicted that the rate of decline would have slowed to 5% during the first quarter. The latest figures were worse than expected. Analysts had predicted the economy would contract at a rate of 5%.
The continuing decline in economic output was led by falling exports and reduced inventory nvestment by firms. The economic decline between January and March was the third straight quarter of contraction, the first time there has been three in a row since 1975.
However, the Commerce Department said this was "partially offset" by higher consumer spending. Consumer boost
In addition to the big fall in exports, the continuing decline in economic output was also caused by reduced inventory investment by firms, and lower public spending.
However, the Commerce Department said this was "partially offset" by higher consumer spending, which rose 2.2% during the quarter, after falling 4.3% in the last three months of 2008.
Analyst Michael Darda, chief economist at MKM Partners, said the economy was "not as bad as it looks".
"It's worth noting that consumption was positive and better than expected," he added.
"There won't be positive growth until the second half of the year probably, but the fall in the second quarter, if it's negative at all, will be far smaller."
The latest GDP figure comes after data earlier this month showed that US housing construction fell in March to its second-lowest level on record.The latest GDP figure comes after data earlier this month showed that US housing construction fell in March to its second-lowest level on record.
Demand for durable goods also continued to fall in March.Demand for durable goods also continued to fall in March.