US GDP fell 2.9% in the first quarter as the economy slumped much deeper than earlier believed, sharply lower than the previous estimate of -1%, as the country shivered under a severe winter.
More recent data has appeared to show a sharp snap back in growth in Q2, but the drop makes the earlier consensus 3% full-year growth figure for 2014 a distant prospect.
The range of the revision was the biggest in comparable records going back to 1976, said the US Commerce Department.
‘While the blip shouldn’t be taken as an indication of underlying weakness in the economy, it has impacted monetary policy,’ said Nancy Curtin, chief investment officer at Close Bros.
‘Given the sheer scale of the weather-related slowdown, Yellen hasn’t really had the option to change policy in recent months.
‘In the context, any move away either away from tapering or towards tightening would have rung alarm bells for investors, and this won’t change until data has been consistently on trend.’