First quarter GDP numbers in the United States were revised sharply lower today, as expected.

U.S. first quarter GDP was revised to a 1.3% annual rate, from an initial report of 2%. Most economists didn’t buy the 2% number when it was released, and today they were vindicated.

BMO Nesbitt Burns says that the largest downward revision came in inventories, which are now estimated to have cut 3.1% from growth in the first quarter. BMO says that while this steep drop in inventories sets us up for a better performance in the months ahead, it still expects to see growth of less than 1% in the current quarter.

Consumer and government spending both held up rather well, but business spending was weak. Pre-tax profits were reported down 3.1% in the quarter, after a 4.3% slide in the fourth quarter of 2000, which indicates weak capital spending.

“There were no major surprises in the revised GDP data, which line up much better with the anecdotal evidence,” says BMO. “While the worst of the inventory correction may be over, growth is expected to remain very soft in Q2 and Q3, as suggested by Mr. Greenspan last night.”