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The US economy contracted slightly less than initially estimated in the Q-1, while corporate profits rebounded, according to a government report on Friday that hinted the recession was moderating. Gross domestic product, which measures total goods and services output within US. borders, dropped at a 5.7 % annual rate, the Commerce Department said, less than the 6.1% estimated by the government last month. The economy contracted at a 6.3% pace in Q-4. While the drop in economic activity was still steep and slightly worse than market expectations for a 5.5% fall, recent data have indicated that the rate of the slowdown was easing and growth could resume by year-end. Output has declined for three straight quarters for the first time since 1974-1975. “The recession is easing. The second quarter is shaping up to be a smaller decline of about 3.0 to 3.5%. It should be the last of the negative quarters,” said Christopher Low, chief economist at FTN Financial in New York.

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U.S. consumer spending rose for a second consecutive month in February and sentiment edged up in March, according to reports on Friday that backed views that the worst of the recession may be over. Spending increased 0.2% after rising by an upwardly revised 1.0% in January, the Commerce Department said. The big adjustment to January’s figure, which was previously reported as a 0.6 % gain, suggested that consumer spending rebounded in the first quarter after a big drop at the end of last year, analysts said.”It looks as though spending will manage an increase of just over 1.0 % at an annual rate in the first quarter,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. Consumer spending, which accounts for over two-thirds of US domestic economic activity, fell at a 4.3% annual rate in the fourth quarter, the biggest decline since 1980. Spending dropped 3.8 % in the July/September 2008 period.

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