U.S. Economy Shrinks 2.9%

America's real gross domestic product, which expanded by an annualized 2.6% in the fourth quarter of 2013, contracted 2.9% in January-March, according to updated data from the U.S. Bureau of Economic Analysis.

It was the economy's biggest quarterly contraction in five years. GDP measures the output of all goods and services within the U.S.

BEA's previous estimate indicated 1% shrinkage for the three-month period. The agency blames the sharper decline on less-than-expected personal spending, which accounts for about 70% of U.S. economic activity.

BEA now estimates growth in personal spending by consumers slowed to 1% in the first quarter from 3.3% in last year's fourth quarter. The agency says imports rose 2%, but exports plunged nearly 9%, reversing 10% growth in the previous period.

GDP also was hurt by declines in inventory investment, state and local government spending and both residential and nonresidential fixed investments. Quarterly results were partly offset by a 6% jump in federal government nondefense spending.