GDP contracts 5.7 percent in Q1 on plunging demand, investment


Optimistic investors may want to view the Q1 U.S. GDP report this way: the worst is likely behind us, from a GDP decline standpoint.

The nation's economy contracted a revised 5.7 percent in Q1, following a 6.3 percent contraction in Q4 2008, the U.S. Commerce Department announced Friday, as the world's largest economy suffered large declines in investment, exports, and domestic demand.

In Q1, business investment plunged 36.9 percent, after-tax corporate profits plummeted 15 percent, and residential investment sank 38.7 percent. A Bloomberg News economists survey had expected Q1 U.S. GDP to decline 5.5 percent. The U.S. economy contracted 6.3 and 0.5 percent in Q4 and Q3 2008, respectively. For all of 2008, the world's largest economy grew a scant 1.1 percent, well below capacity.