Early estimates of a contraction in the U.K. economy were not enough. First quarter 2009 estimates were revisited, showing a 2.4% fall in gross domestic product from the last quarter of 2008 to 2009. This downward revision made the first three months of the year the worst since people wore skinny ties, hated communism, and bore nicknames like "Buzz."

In the second quarter of 1958, U.K. GDP plummeted 2.6%, though the 2.4% threshold matches the depths hit in 1979. The original 2009 Q1 estimate was -1.9%, according to the Office for National Statistics in London.

The first half of 2009 has whizzed by in what seems like a macroeconomic eye-blink. Wasn't President Obama inaugurated just a few weeks ago? It's a cliché but it's true: time flies.

The nation has made strides to recover from its near-decade of policy errors, but much work remains. Accordingly, then, here are three economic wishes for the United States for the second half of the year:

While most headlines in the financial media recently reported economists and institutions projecting the end of the recession in the second half of the year, the IMF said Monday the worst of crisis may be yet to come.

While those who think we are out of the woods believe this recession will have just one dip, the IMF seems to advocate what is known as a "double dip" recession. They believe that the expected upward swing in Gross Domestic Product for developed nations will just precede yet another economic collapse in the first half of next year.

The Congressional Oversight Panel announced in a report this morning that it feels more bank stress tests are needed, especially if unemployment rates continue to rise. The group believes that the stress tests should be repeated periodically as long as banks continue to hold toxic assets.

The panel used a risk-modeling approach that is described as "reasonable and conservative," but added that it is impossible for an outside party to mirror the loss projections that form the core of the stress tests. The group noted that the "more adverse scenario" assumption for the U.S. unemployment rate in the tests has nearly been met in 2009. The yearly average for the unemployment rate stands at 8.5%, which isn't far from the 8.9% assumed in the first round of stress tests. The group recommended that the "Treasury publicly track the status of its stress test macro-economic assumptions (unemployment, GDP, and housing prices) and repeat the stress test if the adverse scenario assumptions have been exceeded."

Economic data was mixed today. GDP for Q1 was revised to less-bad, but not as much as expected. Confidence was higher in a University of Michigan report, but purchasing manager data in Chicago took an expected dip.

All in all, this was one of those trading days where you had no clue where the market was going to be up or down until the last ten minutes of the day. Fortunately, that was up. The DJIA went negative at least four times today.

Here are today's unofficial closing bell levels:

DJIA
S&P500
NASDAQ

Top Analyst Upgrades
Top Analyst Downgrades

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.

Warning: This stuff may be a bit scary. Let's start off by reviewing the events of the past few days. Standard & Poor's downgraded the sovereign debt of Britain from "stable" to "negative" because Britain's debt could equal 100% of GDP and stay there for a few years.

Now word has traveled across the pond and has spread concern here in the U.S. Our debt is exploding and will also rise faster than our GDP. At the end of 2008, U.S. federal debt will equal 41% of GDP. It is expected to rise to 82% of GDP in 10 years and could reach 100% of GDP in fifteen years. Such a debt burden is incompatible with our triple-A rating.

It is feared that such a debt burden would be worse than the recent financial crisis. If we fast forward 10 years, the estimates are that our debt will be $1.2 trillion while our tax revenues would be $2 trillion. This means that we would need a 60% tax increase to balance the budget.

During the current global crisis, many investors have been following the wisdom of Mohamed El-Erian, who is the co-CEO of Pimco, the largest bond manager. In fact, he recently put out a report, called the "Secular Outlook," which has a three-to-five year forecast.

Unfortunately, if El-Erian is correct, we'll need to get accustomed to a "new normal" of muted economic activity.

While the massive governmental intervention has helped to stabilize the financial system, there are nonetheless real costs, which will make it tougher for businesses to innovate and take risks. Plus, the de-leveraging process will continue to be a drag. It will also be tougher to engage in international trade because of new barriers.
The upshot is slower economic growth and higher unemployment.

Analyst upgrades:

• Citigroup upgraded Patriot Coal (NYSE: PCX) to Hold from Sell on easing credit and liquidity concerns following the company's guidance. The firm raised its target on the stock to $7.50 from $4.
  
• UBS upgraded Research In Motion (NASDAQ: RIMM) to Buy from Neutral and raised their target to $90 from $65 as they expect pent-up replacement demand in enterprise to drive 2010 estimates higher and for the consumer smartphone opportunity to grow in 2009 and 2010.
  
• Goldman upgraded Suncor (NYSE: SU) to Conviction Buy from Sell and raised their target to $33 from $25 citing their bullish view on crude oil for 2H09 and 2010 and in the company's ability to lower operating and capital costs in the oil sands region.
• Canadian National (CNI) was raised to Overweight from Neutral at JP Morgan.
  
• Applied Micro Circuits (NASDAQ: AMCC) was lifted at Oppenheimer to Overweight from Neutral.
  
• QLogic (NASDAQ: QLGC) was upgraded to Outperform from Neutral at Baird.

Forget about a bounce back in the U.S. economy for now. GDP crashed 6.1% this quarter, following a 6.3% decline in the last quarter. This is way worse than the 4.7% decline analysts had expected.

This is the first time since 1975 that we have had three back-to-back declines.

That's not all. Exports fell 30%, the biggest quarterly drop since 1969, and imports plunged 34.1%. Inventories shrank by $103.7 billion, compared to $25 billion last quarter.

The newspapers are looking ahead to this Tuesday's G-20 summit in London. Since the leaders who show up there represent countries that control 80% of the world's economy, it could be an important meeting. If you live in the U.K. or U.S., your leaders will be attacked by those in other countries who believe that they should not be asked to bail out the errors of Anglo-American capitalism. Beyond that, little of substance is likely to be accomplished.

However, in an alternative universe, the G-20 meeting might actually accomplish something. Specifically, it could get agreement on six principles on which to rebuild American capitalism. Here's what I think those would be:

• Grow through technology-based innovation. The United States used to be admired around the world for its ability to create new industries. In the 1990s, an Asian government wanted to emulate our success and asked me to discuss how the United States turns innovation into economic growth. Unfortunately, since 2000 our ability to take brilliant ideas from our top universities and turn them into venture-backed companies that sell their shares to the public to fuel the creation of new industries has largely been broken. If there is to be growth, it should come from reviving this process.

As the calendar quarter winds down, let's take look at some of this coming week's biggest expected earnings gainers.

Analysts surveyed by Thomson Reuters expect Memphis-based Fred's Inc. (NASDAQ: FRED) to report fourth-quarter earnings of $0.22 per share, 36.4% higher than a year ago, and revenue of $472.5 million, down 4.4%. For the full year, the forecast is for a profit of $0.66 per share on revenue of $1.8 billion, compared to $0.52 per share and $1.8 billion in the previous year. The discount retailer beat or met earnings estimates in the past three quarters. The long-term EPS growth forecast is 14.0%, which is better than the industry average and that of larger rival Walmart Stores Inc. (NYSE: WMT), and the forward PE ratio estimate is 15.0. In the third quarter, the company had more cash than debt. The consensus recommendation of analysts is to buy FRED. The share price has risen 2.7% since the beginning of the year to $11.05.

This post was written by Minyanville contributor Bennet Sedacca.

My main reason for being long equities was purely a technical/sentiment call. But many of those that were asking me if they should liquidate their portfolios just 10 days ago were asking me what to buy and how long I thought the rally would last. I must confess that my honest to goodness answer is/was 'no idea.' But the change in sentiment was what quickly caught my attention.

Further, TV commentators and others turned bullish awfully quickly.

But the REAL reason is that MACRO TRUMPS TECHNICALS.

I just saw the latest Credit Market Debt/GDP number as of 12/31 (and this is before GDP was going to drop and before all of the recent issuance) and it was a stunning 370%. A record high by a long shot.

So much for de-leveraging. In fact the economy is getting MORE leveraged.

The number "5 million" doesn't seem like much in a world of billions and trillions.

But it's a lot when you're talking about the U.S. job market. That's because five million represents the number of jobs the U.S. economy would have to create to achieve what the U.S. Department of Labor calls "full employment."

Investors received yet another indicator Monday that this is not your father's recession.

The global economy will likely contract in 2009 for the first time since World War II -- including a decline in trade - - the World Bank announced in its most recent report.