U.S. recession is near an end

The pace of the American economy decline is waning as the U.S. gross domestic product fell at a seasonally adjusted 1.0% annual rate April through June in the first estimate of second-quarter GDP. It fell 6.4% in the first quarter and 5.4% in the fourth quarter, at the pit of the recession.

GDP, a broad gauge of the country’s output, has now fallen four-consecutive quarters, the first time that has happened since quarterly records began being kept in 1947.

Government spending, bolstered by the first payouts from a $787 billion stimulus package, propped up the economy and accounted for 20 percent of the country’s output.

The recession began in December 2007, according to the National Bureau of Economic Research. The nonprofit research group uses a broader definition of a recession than do many economists, including industrial production and employment. Another popular definition of a recession is two consecutive quarters of a shrinking GDP.

Many economists expect a rise in GDP starting this quarter, suggesting the recession is at or near its end. They say that even if the economy has bottomed, the recovery over the coming months or possibly years many be painfully slow.

Bright spots have been seen in stock markets, corporate profits, some housing markets and the pace of job losses. New-home sales rose a fourth time in six months during June as buyers jumped to take advantage of fallen prices for property.

Unemployment climbed to 9.5 percent in June, leaving a total of 15 million people out of work and looking for jobs. Generally the job market tends to follow the rest of the economy, as employers wait to hire more workers until their businesses strengthen. This means the threat of sustained, double-digit employment in coming months remains.


Related links:
Investors smell a recovery
Equity volatility subside, interest-rate volatility shot up