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Kimberly Amadeo

It's Final — Q2 GDP Growth Down .7%

By October 1, 2009

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The economy contracted .7% in the second quarter this year, the fourth in a row and the fifth since the recession started in 2007. This was a little better than the BEA estimate of a 1% decline in GDP growth released last month. For a history of all revisions since 2007, see GDP Current Statistics. (Source: GDP News Release)

The slump would have been much worse without the Economic Stimulus Program. Government spending contributed 1.25% to GDP growth, according to Econompic.

What It Means to You

U.S. car sales contributed .2% to Q2 growth, after falling 1.69% in Q1. This could be a result of automakers ramping up for 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".

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(Photo Credit:Bill Pugliano/Getty Images)

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