Gross domestic product (GDP), a measure of the goods and services produced in the United States, shrank by 6.1 percent, according to a preliminary estimate released Wednesday by the Bureau of Economic Analysis.
GDP has now dropped for three straight quarters for the first time since the 1974-1975 recession.
Pointing to continued cutbacks in jobs, investment, and residential and commercial construction, analysts had predicted the economy would shrink by 4.7 percent, the New York Times reported.
The report shows companies cut capital investment at an annual rate of 38 percent, and slashed inventories at a pace of $103.7 billion. Investment in equipment and new structures was down 33.8 percent and 44.2 percent, respectively.
Businesses cut spending on home building, commercial construction, equipment and software, and inventories of goods, the figures show, according to the Associated Press. Sales of U.S. goods to foreign buyers plunged as they retrenched in the face of economic troubles in their own countries.
One bright spot in the numbers was consumer spending, which edged up by 2.2 percent after two quarters of declines; analysts say some big ticket items such as cars and appliances are starting to wear out.
In addition, inventories were drawn down by a record $103.7 billion, which may help ease concerns that businesses were struggling with large stockpiles of unsold merchandise.
Even amid the weaker-than-expected report, some analysts stuck to predictions that the economy would shrink less in the current April-June period as the $787 billion economic stimulus plan goes into action.
“The recession was bad in the first quarter but won’t be as bad going forward,” John Silvia, chief economist at Wachovia, told the AP. “I don’t think this lessens the expected pattern that the economy will be entering a recovery by the end of this year.”