Economy shrank 0.7% in the first quarter

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By Paul Davidson

Gross domestic product — the value of goods and services produced in the U.S. — contracted at a seasonally adjusted annual rate of 0.7% in the January-March period, the Commerce Department said Friday. That’s well below the modest 0.2% growth the government initially estimated.

Economists expected the revision would show a 0.9% contraction, according to the median estimate of those surveyed by Bloomberg.

The report was the government’s second estimate of first-quarter GDP. It will publish a final estimate in June.

The downward revision largely can be traced to a trade gap that reached a seven-year high in March. A strong dollar is hobbling U.S. exports by making them more expensive for overseas customers while making imports cheap for U.S. consumers.

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