Economy's Free-fall Probably Eased In 1st Quarter

JEANNINE AVERSA

WASHINGTON (AP) — The recession's grip on the country may be letting up a bit.

The government is set to release a report Wednesday expected to show the economy shrank at a pace of 5 percent in the first three months of this year. If Wall Street analysts' forecasts' are correct, the figure — while still extremely weak — would be viewed as a hopeful sign that the worst of the recession — in terms of lost economic activity — may be past.

"The recession is easing up," said John Silvia, chief economist at Wachovia. "We're probably bottoming out here in the first half of this year."

The economy in the final three months of last year logged its worst downhill slide in a quarter-century, contracting at a 6.3 percent annual rate as nervous American consumers ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.

The less steep decline in economic activity anticipated by analysts in the January-March quarter is based on the expectation that shoppers at home and abroad didn't pull back quite as much at the start of this year.