For the first time in three years the U.S. economy shrank for the first time in three years because companies reduced investment and added inventories at a much slower pace.
The Commerce Department said today in Washington that in the first quarter GDP decreased at a 1% annualized rate. The last time the economy contracted was in the same quarter of 2011.
Companies increased stockpiles by $49 billion in the first quarter compared to $111.7 billion in the previous quarter.
Expansion in key indicators like consumer spending, income and employment have recently started to improve from weather-affected levels during earlier part of the year.
In the second quarter, the economy is expected to grow at a rate of 3.5 percent. For the whole of 2013, the economy grew 1.9% after a 2.8% gain in the previous year.
According to the Labor Department, employers added 222,000 workers in February, 203,000 in March and 288,000 in April.
As per data from Ward’s Automotive Group, light trucks and cars sold in April at a 16 million annualized rate after a 16.3 million rate in March.
According to today’s report, earnings declined 9.8% in the 1st quarter compared to the previous quarter, and dropped 3% compared to the same period last year.