The economy contracted 1% in the second quarter this year, the fourth in a row and the fifth since the recession started in 2007. In the same report, the BEA released major revisions to all GDP growth estimates since 1929. Despite their changes, this is still the worst recession since the Great Depression. The slump would have been much worse without the Economic Stimulus Program.
The BEA updates its statistical methods every five years. A summary of all changes are in GDP Current Statistics. (Source: GDP News Release)
What It Means to You
U.S. car sales are improving, and will further improve in Q3 with the Cash for Clunkers program. Government stimulus is propping up the economy and keeping this recession from turning into a depression. However, a return to normal bank lending is needed for a full recovery.
Keep an eye out for next month's Durable Goods Reports, which will herald the first signs of improvement in economic growth.
Can You Predict When GDP Will Turn Around?
You may be interested in a fun contest hosted by turnaround expert Renee Fellman. She is offering cash prizes to the first person who accurately predicts when the economy will turn around. So far, most people are predicting spring 2010. Check out the contest at "The Turnaround Blogger".Related Articles
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(Photo Credit:Bill Pugliano/Getty Images)
Comments
I’m not really making any comment. But I want to raise a few questions which you might be willing to answer. 1) How come cheap Chinese goods still flood US markets? 2) Do you think this is advantageous to the economic interests of the US consumers? 3) What is the US government doing to at least minimize the impacts of these Chinese goods on the locally produced commodities?
China still buys U.S. Treasuries to keep the value of the yuan low so it can ship its products to the U.S. cheaply. This is good for U.S. consumers, but not as good for U.S. manufacturers, who can’t compete. Treasury Secretary Geithner is restarting the Strategic Economic Dialogue with China to pressure them to raise the value of the yuan, and open up their markets to U.S. manufacturers.
For more on how China’s economy affects the U.S., see
China’s Economy
U.S. Trade Deficit with China.
Kimberly