The U.S. says its economy contracted in the first three months of this year, battered even more than first thought by an unusually harsh winter.
The government said Thursday the world’s largest economy dropped at an annual rate of one percent in the January-to-March period, the first downturn in three years. An earlier estimate said the U.S. economy had advanced in the first quarter by a minuscule one-tenth of one percent.
The contraction reflected slower stockpiling by businesses, reduced exports and a cutback in local and state government spending.
Some economic analysts in the U.S. say the downturn may be short-lived, with the labor market expanding and the unemployment rate dipping. But the senior economist at one of the biggest U.S. banks, Mark Vitner of Wells Fargo, tells VOA that the first-quarter contraction shows there is little momentum in the U.S. economy.
“Even if you took into account the bad weather, you take into account inventories, the economy clearly, has clearly slowed. We’ve lost momentum,” Vitner said. “And we’ll see a little bit of a bounce back from the bad weather, we’ll see a little bit of a pick-up because there’s less inventory liquidation, but we’re still going to be left with a very sluggish economy.”
The country’s central bank, the Federal Reserve, has continued to trim its direct financial support of the economy and is on pace to end it altogether later this year. But Vitner says the bank could alter some other policies to try to boost economic growth beyond last year’s 1.9 percent advance.
“We’re still looking for two to two-and-a-half percent growth for 2014. And I think the second half will be stronger than the first half,” he said.
In a separate report Thursday, the government said the number of unemployed workers seeking government assistance dropped to 300,000 last week, down 27,000 from the week before. Last week’s figure is near the seven-year low reached three weeks ago and a signal that employers are laying off fewer workers.
Some information for this report was provided by AP, AFP and Reuters.