The U.S. economy shrank at a 6.1% annualized rate during the first quarter, a significantly greater drop than expected by economists, according to advance estimates from the Commerce Department reported Wednesday morning. It was the third consecutive quarterly drop in real GDP, coming on top of a 6.3% in fourth quarter, 2008 and a 0.5% drop in third quarter, 2008. Economists were expecting a decrease in the range of 5%.

Markets were cheered, however, by evidence that consumers were spending. Real personal consumption expenditures increased 2.2% after falling 4.3% in last year's fourth quarter, with spending on durable goods up 9.4% compared to a drop of 22.1% last quarter. Nondurable goods were up1.3% from a decline of 9.4% last quarter, and services, up1.5%, remained flat.

Commerce attributed the decrease in real GDP to a 30% drop in exports, a drop of $1.03 billion in business inventories that shaved 2.79 percentage points from overall GDP and a 37.9% decline in residential fixed investment, as well as declines across the board in business spending.Imports, which are a subtraction from GDP, declined by 34.1%.

Another bright spot in the report was that the threat of deflation appeared to be in check. The price index for gross domestic purchases decreased only 1.0% during the quarter, compared with a decrease of 3.9% in the fourth quarter of last year. Excluding food and energy prices, the index increased 1.4%.

Wall Street took the report, particularly the consumer spending numbers, positively, with all three major stock indices up more than 1% in early trading. Still, the last time GDP posted three consecutive down quarters was in the mid-1970s recession, which was followed by seven years of inflation, economic stagnation and what President Jimmy Carter dubbed national "malaise."