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

Consumer spending, which accounts for roughly 70 percent of national economic activity, is still expected to be negative. But it will probably log a small dip versus the big 4.3 percent annualized decline seen in the final three months of 2008. The same rationale would hold for sales of U.S. exports, which have been crimped as economic troubles in other countries force foreign buyers to be cautious.

Many analysts predict the economy will shrink even less in the current April-June period — at a pace of 1 to 2.5 percent. Tax cuts and increased government spending on big public works projects included in President Barack Obama's $787 billion should help bolster economic activity. Analysts hope the economy will actually start to grow again in the final quarter of this year.

However, the recent outbreak of the swine flu, which started out in Mexico and has spread to the United States and elsewhere, poses a new potential danger. If the flu stifles trade and forces consumers to cut back further, those negative forces would worsen the recession.

Moving to contain the threat, the White House asked Congress for $1.5 billion to fight a swine flu outbreak. President Barack Obama sent a letter to lawmakers on Tuesday, asking them for a supplemental spending plan to build drug stockpiles and monitor future cases.