By Alessandro Albano
Investing.com – The U.S. economy contracted more than expected in the first quarter as Govt regulations still in place and various economic support programs for businesses and families expired.
According to a second estimate by the Bureau of Economic Analysis, real GDP grew by 6.9% in the fourth quarter, down 1.5% year-on-year compared to the initial forecast of -1.4%. The consensus gathered by Investing.com estimates a decline of -1.3%.
The Bureau of Statistics explains that the amendment “reflects the fact that the downward correction of investment in private equity and residential investment was partially offset by the upward revision of consumer spending.” This contraction is due to “low investment in private goods, exports, federal government spending and state government spending” and rising local, import and personal consumption expenditure (PCE).
In the first quarter, an increase in Govt cases led to “continued restrictions and interruptions in corporate operations,” including a “decline in state subsidies for outdated companies and households.”
The correction was slightly offset by a slight positive surprise in unemployment claims. The number of people applying for unemployment fell from 218,000 to 210,000 in the previous week, while the number of consecutive applications increased by 30,000 to a total of 1.346 million.
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