RECESSION EASING? Drop in GDP Falls Considerably, Leaving Some Hopefully Wondering!
SECOND QUARTER, 2009 GROSS DOMESTIC PRODUCT DOWN ONLY 1% - U.S. COMMERCE DEPARTMENT!
Is this deep recession - an economic downturn many have called the worst since The Great Depression of the 1930's - easing? Will it soon come to an end? If the rate of fall of GDP is a key indicator, that answer might be, "Yes!"
But we still may have a ways to go!
As reported in Don Lee's Chicago Tribune article on July 31st, the Commerce Department in Washington DC said last week the amount of total goods and services produced last quarter contracted at an annual rate of just 1% - far lower than the declines we experienced during the Fourth Quarter, 2008, and the First Quarter, 2009 - 6.4% and 5.4% contractions, respectively. Some experts predict the economy may finally be getting to growth mode once again - for the first time since the recession officially began, according to economists, in December, 2007.
Many in the know were expecting a 1.5% decline last quarter. To them, the smaller fall-off was a pleasant surprise! GDP is the broadest measure of U.S. Economic Activity.
The latest GDP reading shows considerably smaller decreases in business investments, a smaller drop in business inventories and exported goods, and an increase in government spending, due mainly to the Obama Administration's renewed stimulus programs.
Also, businesses have shaved their inventory of goods levels, which might indicate a rebound in inventories, quickly, when the economy turns around. Overall, the manufacturing sector appears to be gaining stability.
Many consumers still have kept their wallets tightly closed in recent months, however. Loss of job seems to be the most pervasive fear, and most predict the U.S. Unemployment Rate will continue to rise until the end of 2009.
Although some see the housing market as bottoming out, few experts predict a quick rebound in the housing market, as prices might still show some downward play, and loan underwriting standards for home buyers are ever-increasing in their stringency.
In any event, however, the potential improvement in the U.S. GDP is favorable - although, not a complete sign of immediate economic growth ahead.
DEAN MOSS & DEAN'S TEAM CHICAGO
