The U.S. economy shrank by 1.5 percent in the first three months of the year as weak business and private investment failed to offset strong consumer spending, the U.S. government reported on Thursday.

It was the first decline since the pandemic-scarred second quarter of 2020, as a record wave of COVID-19 cases resulted in continued restrictions and business disruptions, with the Russia-Ukraine crisis aggravating supply chain issues and contributing to a record high inflation in 40 years.

The decline in GDP is worse than the 1.3-percent estimate by Dow Jones and in stark contrast to the better-than-expected growth of 6.9 percent in the fourth quarter last year, the fastest rate in nearly 40 years.

Consumer spending rose by 3.1 percent year on year in the first three months of the year, the fastest since the second quarter of 2021, following a continuously strong labor market and rapidly increasing wages.

Initial jobless claims for the week ended May 21 stood at 210,000, with a drop of 8,000 from the previous week, according to the Labor Department.

"We continue to expect a solid rebound in second-quarter growth, but our initial hopes of a 5 percent-plus print have faded a bit," said Pantheon Macro chief economist Ian Shepherdson, who added that a reading closer to 4 percent seems more likely.

CNBC expected a 3.3-percent growth in the second quarter.