GDP drops 6.1 percent in first quarter

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The economy contracted more than expected in the first quarter, as gross domestic product fell at an annual rate of 6.1 percent.

This follows a 6.3 percent drop in GDP in the fourth quarter and marks the third straight quarter of declines, according to a report released today by the Department of Commerce.

The New York Times reports that economists had predicted a drop of 4.7 percent, and the steep dip could dampen hopes that the pace of economic declines had begun to ebb.

The first quarter decrease reflected negative contributions from exports, private inventory investment, equipment and software, non-residential structures and residential fixed investment.

Companies slashed their capital investment at an annual rate of 38 percent, and cut their inventories at a pace of $103.7 billion as they rushed to reduce costs, the Times reports. Business investment in software and equipment declined by an annualized 33.8 percent, and investment in new structures was down 44.2 percent.

These negatives were partly offset by a 2.2 percent increase in consumer spending and a decrease in imports, which are a subtraction in the GDP calculation.

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