Trade was hit both by the strong dollar and the ports dispute, which weighed on exports through the quarter and then unleashed a flood of imports in March after it was resolved.
That resulted in a trade deficit that subtracted 1.90 percentage points from GDP instead of the 1.25 percentage points reported last month.
The GDP report also showed after-tax corporate profits declined 8.7 percent. That was the largest drop in a year and the second quarterly fall, as the dollar weighed on multinational corporations and oil prices hurt domestic firms.
Multinationals like Microsoft, household products maker Procter & Gamble, and health care conglomerate Johnson & Johnson have warned the dollar will hit sales and profits this year.
While the economy has pulled out of its first-quarter stall, data on retail sales and industrial production have suggested only a modest pace of growth early in the second quarter. But reports on housing, consumer confidence and business spending plans indicated momentum could be building.
Unlike 2014, when growth snapped back quickly after a dismal first quarter, the dollar and investment cuts by energy companies continue to hamstring activity.
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But growth could accelerate as the year progresses.
The value of inventory accumulated in the first quarter was revised down to an increase of $95 billion from the lofty $110.3 billion increase reported last month. That meant inventories contributed 0.33 percentage point to GDP instead of the previously reported 0.74 percentage point, suggesting warehouses are not bulging with unwanted merchandise and that businesses have latitude to order more goods from factories.
While consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised down by one-tenth of a percentage point to a 1.8 percent rate, it could finally get a lift from the considerable savings households amassed because of cheaper gasoline.
Personal savings increased at a robust $726.4 billion pace.
The dollar rally has faded and the greenback is about 4 percent off its peak in March against the currencies of the main U.S. trading partners, easing pressure on U.S. exporters. In addition, rig counts suggest the energy investment rout is nearing its end.