The Bureau of Economic Analysis announced Wednesday that the United States gross domestic product declined by an annual rate of 2.9 percent in the first quarter of 2014, the worst decline since the Great Recession.
In late May, the BEA reported that the economy shrank by 1 percent in Q1 of 2014, but with more complete data, they revised that figure Wednesday to nearly 3 percent. The BEA cites a larger-than-expected increase in the U.S. trade deficit and a significant drop in personal consumption. The major factor at play, according to the Associated Press, was a decrease in health care spending, which accounted for "two-thirds of the downward revision" and saw a decline of 1.4 percent after estimates of growth over 9 percent.
That 2.9 percent drop is the largest quarterly decline since 2009, when GDP declined by more than 5 percent. Since 2010, the only other quarterly decline of GDP came in Q1 of 2011, when it dipped by 1.3 percent. In the last quarter of 2013, GDP increased by 2.6 percent.
When the BEA first announced a decline for Q1 2014, it was met with little more than a shrug. The decline was chalked up to inclement weather, and economists cited solid job numbers to assuage fears. And there doesn't seem to be significant worry about this revision, either. Reassuring, too, is that the second quarter of 2014 is expected to see a GDP increase of more than 3 percent. So this severe revision suggests the drop was a bit steeper than previously thought (and will likely have a few minor ripple effects), but still not a sign of complete economic turmoil ahead.