Hopeful signs seen in U.S. GDP’s 6.1% fall in 1st Quarter

The U.S. economy shrank sharply in the first quarter, capping its worst six-month performance in 51 years, the government said Wednesday. But a large decline in inventories and an uptick in consumer spending suggest the economy is closer to the day when it resumes growing.

The Federal Reserve, meanwhile, signaled it will hold official interest rates low and continue to buy up government bonds and other debt, in an effort to pump credit into banks and companies. The Fed statement triggered a fall in bond prices, pushing the yield on a 10-year note up almost a tenth of a percentage point to 3.1%, a five-month high, a sign that some investors were disappointed the Fed didn’t unveil more aggressive plans to buy Treasurys.

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