US economy’s rate of contraction better than expected
The world’s largest economy received some good news today after the Commerce Department revealed that gross domestic product (GDP) fell by an annualised rate of 5.5% in the first three months of 2009.
The figures were much better than previously thought and follow a 6.3% fall in the final quarter of 2008 and a fall of 0.5% in the third quarter of 2008.
GDP, which is a measure of the country’s output, had been previously estimated at a 5.7% fall.
It appears that the fall in GDP is easing and will give hope the US economy and other major economies worldwide.
However, it was also reported that consumer spending, which makes up for two thirds of domestic economic activity, was worse than previously thought, rising at 1.4% rather than 1.5% and follows the 4.3% fall in the fourth quarter of 2008 – the biggest fall in almost 30 years.
Meanwhile, exports were also worse than originally thought, down 30.6% rather than the 28.7% reported – this represented the biggest fall in foreign sales for four decades. Imports were down 36% – the biggest fall since 1947.
In other news, the Labor Department today reported that the number of Americans filing first-time claims for unemployment benefits jumped by 15,000 to 627,000. Almost 30,000 more than economists had expected.
Finally, the Federal Reserve suggested earlier this week that the pace of economic contraction is slowing but the economy will remain weak.
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