NEW YORK (CNNMoney) — Well, this picture keeps getting uglier.
The U.S. economy shrank in the first quarter of the year, and new revisions by the Bureau of Economic Analysis show the decline was even deeper than reported. Gross domestic product — the broadest measure of economic growth — contracted at a 2.9% annual rate in January through March. That’s the weakest quarter for the U.S. economy since the first quarter of 2009, amid the Great Recession.
But economists aren’t too worried, for three key reasons.
1) They blame the weather: Much of the downturn was due to a brutal winter. Blizzards slowed shipments both domestically and abroad and kept consumers away from shopping malls, car lots and open houses more than usual this winter. The GDP data shows consumer spending was weak in the first quarter. Meanwhile, exports to foreign countries declined and spending on residential real estate slumped.
While these slowdowns stunted economic growth, the effect was only temporary.
2) It’s not a final number: Some economists take this GDP number with a grain of salt because it will be revised again next month when the Bureau of Economic Analysis makes historical revisions. The weak number also doesn’t fit with the story told by other key economic indicators, like job growth.
3) Last, but certainly not least, other data show the economy is improving. Hiring slowed in December, but it has since picked up again. In the last five months, the economy added 1.1 million jobs. Hiring at that level is consistent with an economy that is growing modestly around 2% to 3% a year — not an economy that is contracting.
Overall, the same old story remains: This recovery is underway, but it’s still very slow.