Economy dips at slightly lower 5.5 percent pace

By The Associated Press

Posted: June 25, 2009 at 8:05 a.m.

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The economy tumbled at a 5.5 percent pace in the first quarter, but appears to be doing better now.

The revised reading on gross domestic product, released Thursday by the Commerce Department, showed the economy from January through March didn't fall as deeply as the 5.7 percent annualized decline reported a month ago.

Economists were predicting the government would stick with its previous estimate.

The main forces behind the small upgrade: businesses didn't cut stockpiles of goods as much and imports dropped more sharply than previously estimated.

Meanwhile, the rebound in consumer spending was a little less energetic.

Consumers boosted their spending at a 1.4 percent, down from a 1.5 percent growth rate estimated last month. Still, it marked the strongest showing in nearly two years and a huge improvement from the fourth quarter when skittish consumers slashed spending by the most in nearly three decades.

All told, the report showed the economic damage inflicted by the recession, the longest since World War II. The worst financial crisis since the 1930s, a housing bust and hard-to-get credit have eaten into businesses' sales and profits, forcing them to cut back production and jobs. In the final quarter of last year, the economy plunged at a 6.3 percent annualized pace, the most in a quarter-century.

Many analysts believe the economy isn't sinking nearly as much now as the recession eases it grip on the country.

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