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U.S. Economy Shrinks 6.1 Percent for 1Q 2009

The U.S. economy continued to shrink in the first quarter of 2009, nearly matching the decline of the fourth quarter of 2008, according to the U.S. Commerce Department. Commerce's Bureau of Economic Analysis says real gross domestic product (GDP) -- the output of goods and services produced by labor and property located in the United States -- decreased by 6.1 percent; the fourth quarter of 2008 saw a 6.3 percent contraction. The first-quarter decline was far worse than the average industry predictions that ranged between 4.6 percent and 5.1 percent, according to The Wall Street Journal and Associated Press (AP). The Commerce report says personal spending by consumers rose 2.2 percent during the first quarter, but that those gains were mostly offset by businesses that cut spending on commercial construction, equipment, software, and inventories, and by what AP says was the biggest reduction in U.S. exports in more than 40 years. Commerce will release its final first-quarter numbers at the end of May. AP says that before the first-quarter report, its analysts were more optimistic about the current April-to-June period, predicting a contraction of only 1 to 2.5 percent, but that the first-quarter numbers, combined with the potential negative economic effects of the swine flu outbreak, will likely worsen their forecasts.

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