US ECONOMY: Recession near end, figures suggest

GLIMMER OF HOPE

The U.S. recession appears to be near an end, government figures suggest, even as revisions to prior years’ data show that the downturn has been even more severe than previously thought. 

Gross domestic product fell at a seasonally adjusted 1.0% annual rate April through June, the U.S. Commerce Department said Friday in the first estimate of second-quarter GDP. That was better than the 1.5% decline Wall Street economists had expected.

GDP is the broadest measure of the economy, which has been mired in recession since December 2007, worsening in recent quarters. The fourth quarter of 2008 and first quarter of 2009 measured the worst two quarterly declines in 26 years — the nation’s gross domestic product fell a revised 5.4% and 6.4% respectively.

The slower second-quarter contraction was largely due to a smaller decline in exports and business inventories as consumer prices and government spending rocketed higher.

GDP has now fallen four-consecutive quarters, the first time that has happened since quarterly records began being kept in 1947.

But with the pace of decline waning, “the worst recession since the Great Depression is likely coming to an end,” said Sung Won Sohn, a professor at California State University.

The main engine of the economy, consumer spending, surprisingly fell last quarter. Job fears and stagnant wages appear to be keeping wallets tight, and are seen muting the economy’s expected recovery in the second half of 2009.

Farewell recession? Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said the GDP number was encouraging, and he expects the recession to come to an end this summer. While GDP is a trailing indicator, he said the change in direction suggests the worst is behind us.