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| Version 2 | Version 3 |
|---|---|
| Slump in exports hits US economy | Slump in exports hits US economy |
| (about 1 hour later) | |
| The US economy continued to contract in the first quarter of 2009, led by the biggest fall in exports for 40 years. | 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. |
| Exports fell by 30%, the Commerce Department said, as the global recession hit worldwide spending. | Exports fell by 30%, the Commerce Department said, as the global recession hit worldwide spending. |
| The latest figures were worse than expected. Analysts had predicted the economy would contract at a rate of 5%. | The latest figures were worse than expected. Analysts had predicted the economy would contract at a rate of 5%. |
| The economic decline between January and March was the third straight quarter of contraction, the longest period of continuous decline since 1975. | |
| All major exporting nations are being hit by the slowdown in world trade, which the IMF forecasts will contract by 11% this year. | |
| Exporters Japan and Germany are expected to suffer even bigger falls in GDP in 2009 than the US. | |
| The decline in exports, which the IMF expects to According to the IMF, world trade is expected to contract by 11% this year, and this has affected all the major exporting nations, with Japan and Germany projected to have an even bigger fall in GDP in 2009 than the US. | |
| Consumer boost | 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. | 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. |
| Business investment fell by 37%, while construction was down 38%. | |
| 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. | 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". | 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. | "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." | "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." |
| US stock markets shrugged off the news, with the Dow Jones industrial average up by more than 1% in early trading, as investors focused on the Federal Reserve's two-day interest rate meeting. | |
| 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. |
| Stimulus package | |
| In the second half of the year, the US economy may also benefit from the $787bn (£533bn)economic stimulus package which was passed by Congress in February. | |
| Very little of that spending reached the economy in the first quarter, with the figures showing government spending actually fell 3.9% in that period. | |
| However, the worse-than-expected economic news provides a gloomy backdrop to mark President Obama's first 100 days in office. | |
| In recent weeks, administration officials said they were seeing "tentative signs" of economic recovery. | |
| One sign appeared on Tuesday when consumer confidence rose to its highest level in two years. | |
| However, unemployment is still rising by over 500,000 per month and is expected to top 10% by the end of the year. | |
| The Federal Reserve is expected to give an assessment of the state of the US economy when it announces its decision on interest rates later on Wednesday. | |
| It is widely expected to keep interest rates on hold at near zero, but may announce new measures of quantative easing to boost the economy. |