Americans went into hibernation during the bitter polar vortex winter this year – and the U.S. economy slumbered along with them, dropping a stunning 2.9percent in the first quarter of 2014.
The sharp drop from January through March is the biggest dip since the Great Recession shaved 5.4percent off the Gross Domestic Product five years ago. It is one of the biggest contractions outside of a recession is recent history.
Economists believe most of the contraction was the result of a short-lived slowdown in spending due to an abnormally long and and harsh winter that disrupted shipping, shut down factories and kept consumers away from shopping malls and auto dealerships.
The first-quarter contraction reported Wednesday by the Commerce Department was even more severe than the 1 percent annual decline it had estimated a month ago. Besides the harsh winter, much of the downward revision reflected a drop in health care spending. Another factor was a bigger trade deficit than initially estimated.