The gross domestic product, the most comprehensive measure of the nation's economic health, shrank by 3 percent last quarter.
"There's no question that these numbers tell us that the economy has weakened and weakened substantially," Ed Lazear, chairman of the President's Council of Economic Advisers, said. "We knew that, it wasn't unexpected."
It may have been anticipated because the U.S. economy continues to shed jobs. Nearly 480,000 people are receiving unemployment benefits right now, a sign that the prospects for finding work are weak.
Some lawmakers are calling for a second stimulus package, which might include extending unemployment benefits, but peninsula Congresswoman Jackie Speier would prefer creating public works jobs to get people working.
"We need to create jobs that are going to help us through a very, very serious recession, so I'm looking at a package that creates programs around infrastructure, much like FDR did after the Great Depression," Speier said.
Bush administration officials are skeptical. The White House prefers slashing interest rates and pumping billions into the financial sector - extraordinary measures also being taken by foreign governments. They hope that will be enough to head off a global recession.
"Whatever we may call it, certainly we are seeing a period of dramatic slowdown in economic activity," Department of Commerce spokesperson Steven Landefeld said.