The current recession--appraised by most economists now as the worst since World War II--is showing signs of easing. Three articles over the past few days in national business sources suggest that better economic times may be just ahead.
A front-page story in Saturday's edition of the Wall Street Journal reported that U.S. gross domestic product contracted at a 1% annual rate last quarter, its slowest pace in a year, but a marked improvement from the first-quarter contraction of 6.4% and the fourth quarter's 5.4% pullback. "Consumer spending stabilized early this year," it was reported, "but businesses kept cutting back sharply on payrolls, inventories and new-equipment spending."
The Chicago Tribune on Saturday reported that economists, who were expecting GDP to be down at about a 1.5 percent rate in the second quarter, were largely heartened by the data. The report reflected much smaller decreases in business investments, a smaller drop in inventories and exports, as well as an upturn in government expenditures as the federal stimulus measures took hold. The GDP news, the article adds, "comes on the heels of a number of reports suggesting that the long-troubled housing market decline is bottoming and that manufacturing is also stabilizing." But the labor market remains troubled and, with the unemployment rate expected to keep rising until at least the end of the year, "many people will not feel a recovery."
In Bloomberg News this morning: "Manufacturing in the U.S. probably shrank in July at the slowest pace in 11 months as the recession eased and factories moved closer to stabilization, economists said ahead of a private report." The Institute for Supply Management's factory gauge increased to 46.5, from 44.8 in June, according to the median forecast in a Bloomberg News survey. Other reports indicate manufacturing, which accounts for about 12 percent of the world's largest economy, is improving.
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