As we approach the second half of 2009, it's a good sign the rate of economic contraction is slowing. As consumer confidence grows, the Gross Domestic Product's rate of decline appears to be stabilizing, as does the national rate of job losses -- both metrics providing "glimmers of hope." That's the way it is these days -- we search the skyline for glimmers.
GDP data released by the U.S. Commerce Department at the end of April confirmed economic activity dropped sharply in the first quarter. The GDP fell by a 6.1 percent annualized rate in the first quarter of 2009 versus 6.3 percent in the last quarter of 2008.
Domestic production shrank by $337 billion from the third quarter of 2008 to the first quarter of 2009. A U.S. Labor Department report issued in early May indicated that the number of unemployed rose to 13.7 million in April, setting a 16-year-high jobless rate of 8.9 percent. Unemployment data showed a net loss of 539,000 non-farm positions -- a clear improvement from 699,000 jobs lost in March and 681,000 in February.
Still, it's hard to be encouraged by job losses of more than half a million and an economic contraction greater than 6 percent. But some of the finer details of the GDP decrease and consumers' expenditures do offer encouragement. The drop in GDP was primarily due to a drastic reduction in inventories and business investment (38 percent contraction at an annual rate). Personal consumption, meanwhile, which accounts for 70 percent of the GDP, expanded at a 2.2 percent rate (primarily on durable goods consumption).
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