U.S. Economy Shrank as GDP Declines 0.7 Percent in the First Quarter

U.S. real GDP for the first quarter decreased at a rate of 0.7 percent, according to the second estimate released by the Bureau of Economic Analysis. The decline is in stark contrast to the 2.2 percent growth in the fourth quarter of 2014.

The decline primarily reflected a deceleration in personal consumption expenditures and downturns in exports, nonresidential fixed investment and state and local government spending that were partly offset by a deceleration in imports and upturns in federal government spending and in private inventory investment.

Real exports largely contributed to the decline, decreasing 7.6 percent in the first quarter compared to 4.5 percent growth in the fourth quarter.

Real personal consumption expenditures increased 1.8 percent in the first quarter, a much slower rate compared to the 4.4 percent growth the previous quarter. Real nonresidential fixed investment decreased 2.8 percent in the first quarter, in contrast to an increase of 4.7 percent in the fourth quarter. Real federal government spending increased 0.1% this quarter after falling 7.3 percent in the fourth quarter.