U.S. economy shrank at an alarming rate

U.S. GDP fell at an annualized rate of 6.1% in the first quarter of this year according to data released on Wednesday April 29th.

The world’s largest economy has now contracted for three quarterly periods in a row. The fall was bigger than most had expected, and puts the cumulative shrinkage so far during this recession on a par with those in the downturns of 1973-75 and 1981-82, the worst of the post-war period.

Much of the fall was due to businesses slashing inventories to cope with drops in sales. Consumer spending actually rose by 2.2% at an annual rate, led by rising purchases of cars and other durable goods after a disastrous 2008, but much of this was offset by a sickening plunge in business investment, which fell at a 38% annual rate, the steepest on record. That is the steepest decline since records began, beating the old record set back in 1952, according to Morgan Stanley.

US consumer prices fall for first time since 1955

US consumer price index (CPI) slipped 0.4% below its year-earlier level in March and recorded their first 12-month decline in over 50 years, since 1955, with energy prices down 23% over 12 months.

The "core" CPI, which excludes food and energy prices, was up 1.8%.

Falling prices would make it tougher for borrowers to pay off debt, leading to even more defaults and even tougher lending standards amid continuing credit woes.

Unemployment rate jumps to a 26-year high 8.5%

U.S. unemployment rate in March jumped to a 26-year high 8.5% from 8.1% in February, while 663,000 jobs lost in the month, a sign that the recession is getting worse.

The total number of jobs lost since the recession began in December 2007 is 5.1 million. Of the 5.1 million jobs lost, 72% have disappeared in only the past six months.