May 29 - The U.S. economy contracted for the first time in three years in the first quarter, hurt by unusually cold weather, according to revised government estimates. Fred Katayama reports.
The cold winter weather froze economic growth much more than expected. The U.S. economy shrank one percent in the first quarter in the government's second read on performance, contracting for the first time in three years. The wet weather hurt home building, cut traffic at shopping malls and crippled transportation. Businesses didn't see the need to build up inventory, which grew at its slowest pace in a year. The slow housing market resulted in a drop in residential fixed investment. And strong import growth expanded the nation's trade deficit more than estimated. Corporate profit fell nearly 14 percent. That's the biggest drop in nearly six years. One bright spot: consumers spent more, spurred on by the Affordable Healthcare Act. Equity investors shrugged off the report. Many economists expect growth to bounce back in the second quarter amid signs that activity is coming back. We'll get the next revised estimate on June 25.