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| US economy contracted in first quarter of 2014 | |
| (35 minutes later) | |
| The US economy shifted into reverse in the first three months of 2014 shrinking by an annualised rate of 1%, official estimates have shown. | The US economy shifted into reverse in the first three months of 2014 shrinking by an annualised rate of 1%, official estimates have shown. |
| It is the worst economic performance since the first quarter of 2011. | It is the worst economic performance since the first quarter of 2011. |
| It is also a big fall on the 2.6% rise in economic output in the final quarter of last year. | It is also a big fall on the 2.6% rise in economic output in the final quarter of last year. |
| The US Commerce Department's first reading of gross domestic product (GDP) showed the economy grew at an annualised rate of just 0.1%. | The US Commerce Department's first reading of gross domestic product (GDP) showed the economy grew at an annualised rate of just 0.1%. |
| The fall in output was blamed on an unusually cold and disruptive winter - one of the coldest in the US for 20 years - and a plunge in business investment. | |
| Economists estimated the weather could have cost up to 1.5 percentage points of GDP. | |
| However, the Commerce's Department's report did not estimate the effect of the winter weather. | |
| Rebound | |
| The fall was also twice as big as economists expected. | |
| Most Wall Street analysts had forecast the economy to contract by around 0.5%. | |
| But the Commerce Department said there was already evidence that the economy was rebounding, with data ranging from employment to manufacturing already pointing to a sharp acceleration in economic activity in the second quarter. | |
| Tumbling exports, while not as severe as initially thought, combined with stronger imports in the first quarter resulting in a larger than expected trade deficit which shaved 0.95 percentage points off US economic output. | |
| Consumer spending, which accounts for more than two-thirds of US economic activity, increased by 3.1%. revised up slightly from 3% in the first estimate. | |
| Business spending on non-residential structures, such as gas drilling, fell by 7.5%. It had previously been reported to have increased by 0.2% . | |
| The report showed corporate pre-tax profits also plunged 13.7% in the first quarter, the biggest drop since the fourth quarter of 2008. |