Official figures have revealed that the US economy has continued to shrink during the first three months of this year. Gross Domestic Product contracted by 6.1% from January to March, which was not much better than the previous quarter, where the contraction was 6.3% for the period October to December of 2008.
These latest figures, released by the US Commerce Department, were significantly worse than predicted. Most analysts had expected that the rate of contraction would be around 5% for this period, and not the 6.1% that was announced.
The decline has been largely attributed to a reduction in investment, by firms, in addition to falling exports. Surprisingly, this was offset to a certain extent by an increase in consumer spending, which was unexpected. This was unexpected, since many US citizens are struggling with declining house prices, increasing unemployment and unaffordable credit card debt – with many people looking for ways to get out of debt with financial assistance programmes or debt consolidation loans.
The latest statistics, for GDP, were released shortly after announcements that the US
construction of houses declined to its second-lowest level since records began.