The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, the government reported Wednesday, but the setback is expected to be temporary, with growth rebounding solidly since spring.
The Commerce Department said gross domestic product (GDP) shrank at a 2.9 percent annual rate in the January-March quarter as a severe winter contributed to the biggest contraction since the peak of the Great Recession five years ago.
The department initially reported first-quarter growth of 0.1 percent in April, then a 1 percent GDP contraction a month ago. The difference between the second and third estimates - 1.9 percentage points - was the largest on records dating from 1976.
While economic problems largely have been blamed on an unusually cold winter, two-thirds of the latest downward revision reflected a decline in healthcare spending. Another significant factor was a bigger trade deficit than initially estimated.
The economy grew at a 2.6 percent pace in the fourth quarter of 2013. With the first quarter long past and the current April-June quarter appearing solid, investors likely will ignore Wednesday's report. Many analysts believe the economy now is expanding at a strong rate nearing 4 percent growth.