U.S. gross domestic product contracts by 5.7% in the first quarter

Posted May 29th 2009 2:20PM by Connie Madon
Filed under: Economic Data, Recession

We have some good news and some bad news. The bad news first: The U.S. Gross Domestic Product declined by 5.7% in the first quarter, compared with a drop of 6.1% last month. This was a slight improvement over the 6.3% decline in the fourth quarter. The last six months have been the weakest in the past 51 years. Pulling the economy down were plunging exports, business inventories and the collapse of spending for non-residential construction.

Now for the good news: Corporate profits surged 3.4% to $1.307 trillion, after plunging 16.5% in the fourth quarter. The financial sector led the way with a jump of 94.9% compared with a drop of 18% last quarter. It is believed that the massive stimulus spending has prevented the economy from spiraling downward any further.

Consumer confidence was also boosted by the recent stock market rally and a rise in consumer confidence from 65.1 to 68.7 in May, the highest since last September. It reached a 30-year low in November of 55.3

Overall, economists have taken to hope that there are signs of stability in the fact that the downturn is slowing and the stimulus packages are now taking hold.

Best new is that the National Association of Business Economics said that the recession could end this year and predicted growth to be 2% next year.

Do you you see any improvement in your area?

Tags: corporate profits, CorporateProfits, GDP, inthenews

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Reader Comments (Page 1 of 1)

5-30-2009 @ 9:05AM

Irish said...

Here, in Florida, the only changes I've seen are more businesses closing, thousands of homes with "For Sale," "Bank Owned," and "For Rent" on them. Unemployment still going strong. Paychecks dwindling in comparison to rising gas, food, and utility bills. So, when you write, "It is believed that the massive stimulus spending has prevented the economy from spiraling downward any further." My only question would be, "For whom did the stimulus spending help?" The entire stimulus package was meant to toss BILLIONS to the financial sector and NOTHING to the people. This was the largest case of extortion our government has committed at the expense of the very people they're supposed to protect. A revolution is brewing.