US economy contracts after unusually heavy snow

The US economy contracted in the first quarter as it buckled under the weight of unusually heavy snowfalls and a resurgent dollar, but activity has rebounded modestly.

The government yesterday slashed its GDP estimate to show it shrinking at a 0.7% annual rate instead of the 0.2% growth pace it estimated last month.

A larger trade deficit and a smaller accumulation of inventories by businesses than previously thought accounted for much of the downward revision. There was also a modest downward revision to consumer spending.