Economy could be getting better
The economy shrank at an once a year rate of 1% in the spring, a better-than-expected showing and more proof the recession is drawing to a close. Many researchers think the economy is growing in this quarter, but they caution that any rebound won’t be accompanied at first by rising job. Jobless claims figures released Thu. show a drop in claims but remain well above levels related to a healthy economy.
The Commerce Dept’s latest estimate for Q2 GDP total output of the state’s economy was unvaried from the 1st guess released last month. The 1% drop at an yearly rate, while representing a record 4th sequential decline, was far smaller than the prior two quarters. It also was better than the 1.5% decline economic gurus anticipated.
The report Thu. revealed that businesses slashed their inventories more than first reported and cut back more sharply on investment in new plants and apparatus. The executive asserted consumer expenditure, which accounts for approximately seventy pc of business activity, fell at a yearly rate of 1% in 2nd quarter, a small improvement from the 1.2% decline reported last month.
The 1% overall rate of decline in the April-June quarter followed decreases of 6.4% in Q1 and 5.4% in the final 3 months of 2008, sharpest back-to-back declines in a half-century. The 4 straight quarterly declines in GDP mark the 1st time which has occurred on central authority records that date to 1947. The recession that commenced in December 2007 is the longest since WW2, and the deepest vis the drop in the GDP, which is down 3.9% from its previous top. But economic experts are heartened the decline slowed to a 1% rate in the spring. Many researchers think the state’s $787 billion industrial impulse plan and the cash for clunkers program to lift auto sales will lift GDP expansion to around two percent in this July-September quarter. But the return to business expansion won’t mean more roles initially. Economic experts expect the jobless rate, now 9.4%, to keep rising thru the spring of next year.
The Work Dept announced Thu. that first-time claims for unemployment benefits slipped to a seasonally changed 570,000, from an upwardly revised 580,000 the prior week. The quantity of people continuing to make a claim benefits fell to 6.13 million from 6.25 million, lowest since early Apr. The once a week figures remain far above the 325,000 or so that researchers say is consistent with a healthy economy. Government business confidant Christina Romer said Tues. the rate of unemployment is probably going to hit 10% this year. The govt makes 3 guesses of the economy’s performance for any given quarter. Each new GDP estimate is predicated on more complete info.