Economic Slump Worst Since Depression

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The BEA final report revised the U.S. GDP growth rate for Q1 2009 to -5.5%. This is better than the 5.7% decline reported in the preliminary report. However, this is still the third declining quarter in a row, and the fourth since the recession began in Q4 2007. The slowdown in Q1 was less than the 6.3% drop in Q4 2008. This is the first time since the Great Depression that GDP fell more than 5% for two quarters in a row. The silver lining is that a large contributor to the decline was a decrease of business inventories. This means that inventories are getting lean, potentially boosting production next quarter if orders hold steady. (Source: GDP News Release)

What It Means to You

The slump in U.S. car sales contributed 1.36 percentage points to the Q1 decline and 2.01 points to the Q4 2008 decline. Another contributor was the fall-off in commercial construction.

Keep an eye on future Durable Goods Reports, which will herald the first signs of improvement in economic growth. For a review of the most recent GDP reports, see GDP Current Statistics.

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