Economy fell at a little lower rate in 1 Qtr

The revised reading on gross domestic product (GDP) showed the economy from January through March didn't fall as deeply as the 5.7 percent annualized decline reported a month ago. Instead, the economy tumbled at a 5.5 percent pace in the first quarter.

Real GDP, the measure of the value of goods and services produced in the economy, fell at a 6.3 percent pace in the fourth quarter of 2008.

The GDP revisions were largely trivial and don't alter the big picture of an economic calamity in the six months following the collapse of Lehman Bros. The main changes were higher inventories and lower imports than previously estimated. Consumer spending, business investment, residential investments, and exports were revised lower.

During the quarter business investment declined at a record rate. Investments in housing fell at the fastest pace in 29 years. Domestic demand fell at the fastest rate in 29 years. Exports fell at the fastest pace in 40 years, while imports fell at the fastest pace in 62 years.

The business sector was the major story for the first quarter. Firms stopped new investments, and shed workers and inventories at a dizzying pace to bring down production and stockpiles to match the lower demand from U.S. and foreign markets.

The economy appears to be doing better now, even though heavy layoffs persist. Many analysts believe the economy isn't sinking nearly as much now as the recession eases it grip on the country. For the current April-June quarter, economists predict GDP is sinking at a pace of between 1 and 3 percent.

Many economists predict the economy will start growing again as soon as the third quarter, although the unemployment will keep rising. The nation's unemployment rate hit a quarter-century peak of 9.4 percent last month and is likely to reach 10 percent by the year-end.

U.S. unemployment rate at 26 year high

While the deterioration pace of payroll loss showed at some improvement in the economy, the U.S. unemployment rate jumped to a 26-year high of 9.4% in May from 8.9% in April. The unemployment rate was the highest level since February 1983.

Employers cut 345,000 jobs from their payrolls in the month, down from the revised decline of 504,000 jobs in April. This was the fewest jobs lost in a month since last September.

Payrolls had lost an average of 643,000 in the previous six months. The economy has lost 6 million jobs since the recession began in December 2007.