The U.S. economy shrunk by 2.9% in the first quarter, far worse than the -1% revision reported May 29, and sounding an alarm among serious financial analysts who see it as a harbinger of recession even as politicos are downplaying the severe reversal.

The revised first-quarter contraction was the biggest decline since early 2009 when it hit -6.9%, and contrasts with the previous estimate of a 1% contraction.

Mainstream financial analysts and pundits predicted a 2.6% growth in the first quarter of 2014, making it a nearly 5% swing.

The gross domestic product has never fallen more than 1.5% except just before or during a recession since the government started tracking the GDP quarterly in 1947.

The downward revision is driven by personal consumption expenditures falling from 3.1% to just 1%, well below the 2.4% expected.

So much for consumer confidence growth.

Pictured: Possibly a CNBC analyst

At this point, if all three quarters remaining this year see what looks like wildly optimistic growth of 3%, the best growth the economy can hope for is 1.5% for the year.

The housing market is officially stalling out, and it’s unclear whether the economy is a drag on housing or housing is a drag on the economy.

May’s big headline number for existing home sales, touted at a near 5% gain over April, is still down 5% from May 2013. Worse, most of the gains were in the $1 million-plus home bucket, which excludes the bulk of American homebuyers.

Purchase applications are down despite record low mortgage rates and a severe slowdown in home price appreciation.

The same pundits touting the strength of the economy and the housing market at the start of 2014 are today downplaying these numbers, predicting a big snapback and recovery in the second and third quarters. Some, like Goldman Sachs, are even revising their second-quarter predictions, from 3.8% to 4%, based solely on optimism and a need to make their models work.

It will be interesting to see if – or rather, how badly – they’re wrong once again.