Harsh Winter Takes Bite Out of GDP

By  | 

WASHINGTON (AP) - Winter's snowstorms and bitter cold hit the U.S. economy even harder than first suspected.

The government now says the economy actually shrank in the first quarter at an annual rate of 1 percent. The dip reflects slower stockpiling by businesses, a cutback in business investment and a wider trade deficit. Economists are forecasting a strong rebound in the April-June quarter.

Meanwhile, the number of Americans seeking unemployment benefits is near its lowest level in seven years. The Labor Department says weekly applications for unemployment aid dropped by 27,000 last week to a seasonally adjusted 300,000. The less volatile four-week average fell to the lowest number since August 2007, at 311,500.

Mortage rates have fallen for the fifth straight week. Mortgage buyer Freddie Mac says the average rate for a 30-year loan edged down to 4.12 percent this week, while the average for a 15-year mortgage dropped to 3.21 percent.

And home buying is picking up, though the pace is still weaker than last year amid higher prices and relatively tight supplies. The National Association of Realtors says its seasonally adjusted pending home sales index rose 0.4 percent last month to 97.8. The index remains more than 9 percent below its level a year ago.