US Economy Shrinks 1%

After growing 3.2% in the last three months of 2013, the US economy has retracted in the first quarter of this year thanks to extreme weather conditions

Emma Wall 29 May, 2014 | 4:32PM
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The US economy has retracted. Primarily reflecting a downward revision to private inventory investment, the Commerce Department released a report on Thursday showing that US gross domestic product decreased in the first three months of 2014.

The report showed that GDP decreased by 1.0% in the first quarter compared to the initial estimate for a 0.1% uptick. Economists had been expecting the revised data to show a somewhat smaller contraction of about 0.5%.

While some economists are holding the retraction up as proof that the wheels are coming off the post-recession recovery in America, James Dowey of Neptune expected the first quarter growth figure to be disappointing due to the extreme weather experienced across the country in January and February.

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Emma Wall  is former Senior International Editor for Morningstar