US GDP contracts 6.1% in Q1

Showing no immediate signs of recovery, the American economy shrank at staggering rate of 6.1 per cent in the first three months of 2009, one of the worst contractions in decades.

Rattled by the global economic turmoil, the economy had clocked a negative growth of 6.3 per cent in the fourth quarter of 2008.

The advanced estimates from the Bureau of Economic Analysis showed that the US GDP contracted 6.1 per cent in the first quarter of this year, much higher than expectations.

"Real gross domestic product -- the output of goods and services produced by labour and property located in the United States -- decreased at an annual rate of 6.1 per cent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter)," the BEA said in a statement on Wednesday.

Reportedly, this is for the first time in over 60 years, the US economy has witnessed negative growth of more than 6 per cent for two consecutive quarters.

The BEA noted that the decrease in real GDP in the first quarter was mainly due to negative contributions from exports, private inventory investment, equipment and software and non-residential structures, among others.

However, the same was partly offset by a positive contribution from personal consumption expenditures (PCE).

Meanwhile, the contraction of 6.3 per cent in the fourth quarter of 2008 was the worst ever in 26 years. In the third quarter of last year, the real GDP fell 0.5 per cent.

The US economy officially entered into recession in December 2007 and the crisis turned severe with the collapse of Lehman Brothers in September last year, pushing the Federal government to unveil unprecedented measures.

"The slightly smaller decrease in real GDP in the first quarter than in the fourth reflected an upturn in PCE for durable and nondurable goods and a larger decrease in imports that were mostly offset by larger decreases in private inventory investment and in non-residential structures and a downturn in federal government spending," the statement said.

In May, the American economy would be in recession for 18 straight months, the longest ever since the Great Depression in the 1930s.