MercoPress. South Atlantic News Agency

US economy contracts 6.1% in first quarter of 2009; exports plunge

Darda: “It's worth noting that consumption was positive and better than expected”

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.

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 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.

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.

Demand for durable goods also continued to fall in March.