WASHINGTON - The U.S. economy shrank at a steep annual rate of 2.9 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 says the first-quarter contraction was even more severe than the 1 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 4 percent growth in the current second quarter.