US economy shrank by 5.5 percent in first quarter

The US economy shrank 5.5 percent in the first quarter of 2009, according to a final estimate by the US commerce department Thursday that confirms the worst six-month stretch in five decades.

The US economy shrank 5.5 percent in the first quarter of 2009, according to a final estimate by the US commerce department on Thursday that confirms the worst six-month stretch in five decades.

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The department's final figure was improved slightly from a previous estimate of a 5.7-percent contraction. Yet the massive drop still keeps the US in its longest recession since the Great Depression.

The world's largest economy shrank 6.3 percent in the fourth quarter of 2008. Economists are divided over whether the recession that began in December 2007 will end some time this year or the start of 2010.

Plunging exports, manufacturing, housing construction and company inventories fuelled the declines in the economy over the first three months of the year.

Consumer demand, which makes up about two-thirds of US output, actually increased 1.4 percent after plummeting 4.3 percent in the fourth quarter.

The US Federal Reserve on Wednesday kept its key interest rate at an unprecedented low of 0 percent to help revive the country's economy.