GDP Shrank At 5.5 Percent Pace In 1Q

Economic Slide Not As Bad As Initial Report Of 5.7 Percent Rate Of Decline

(AP)  The U.S. economy tumbled at a 5.5 percent pace in the first quarter, but appears to be doing better now.

The revised reading on gross domestic product, released Thursday by the Commerce Department, showed the economy from January through March didn't fall as deeply as the 5.7 percent annualized decline reported a month ago.

Economists were predicting the government would stick with its previous estimate.

The main forces behind the small upgrade: businesses didn't cut stockpiles of goods as much and imports dropped more sharply than previously estimated.

Meanwhile, the rebound in consumer spending was a little less energetic.

Consumers boosted their spending at a 1.4 percent, down from a 1.5 percent growth rate estimated last month. Still, it marked the strongest showing in nearly two years and a huge improvement from the fourth quarter when skittish consumers slashed spending by the most in nearly three decades.

All told, the report showed the economic damage inflicted by the recession, the longest since World War II. The worst financial crisis since the 1930s, a housing bust and hard-to-get credit have eaten into businesses' sales and profits, forcing them to cut back production and jobs. In the final quarter of last year, the economy plunged at a 6.3 percent annualized pace, the most in a quarter-century.

Many analysts believe the economy isn't sinking nearly as much now as the recession eases it grip on the country.

For the current April-June quarter, economists predict GDP is sinking at a pace of between 1 and 3 percent. But that's not nearly as much as it had in the prior six months, the worst performance in 50 years. The government will release second-quarter results at the end of next month.

GDP measures the value of all goods and services produced within the United States and is the best barometer of the country's economic health.

Federal Reserve Chairman Ben Bernanke predicts the recession, now the longest since World War II, will end later this year. President Barack Obama's stimulus of tax cuts and increased government spending should provide some help, along with aggressive revival efforts by the Fed, including cutting a key bank lending rate to a record low near zero.

Many economists predict the economy will start growing again as soon as the third quarter, although the pace is likely to be plodding as economic recoveries after financial crises tend to be slow. That means unemployment will keep rising.

The U.S. unemployment rate hit a quarter-century peak of 9.4 percent last month and is likely to reach 10 percent by the year-end. The jobless rate could rise as high as 11 percent by the summer of 2010 before making a gradual descent, economists say. The highest rate since World War II was 10.8 percent at the end of 1982.

The outlook for a shaky job market, which is likely to hinder wage growth, translates into a cautious consumer, another reason any recovery will be subdued.

And other risks abound. Skyrocketing foreclosures, rising interest rates and a worse-than-expected credit and financial conditions could send the economy into another tailspin. Economists don't think that is the most likely scenario, but it can't be ruled out.

In the GDP report, businesses' cuts to inventories ended up shaving off 2.20 percentage points from economic activity. That was less than the 2.34 percentage-point reduction previously reported and factored into the upward revision to first-quarter GDP.

Another helper: imports fell at an annualized pace of 36.4 percent, deeper than the 34.1 percent rate of decline previously estimated. That translated into a bigger boost to first-quarter GDP from trade. U.S. exports fell sharply but not as much as imports.

The government makes three estimates of the economy's performance for any given quarter. Each estimate of gross domestic product, which measures the value of all goods and services produced within the U.S., is based on more complete information. The third one came Thursday.

[pepperwood2]

GDP Shrank At 5.5 Percent Pace In 1Q - The U.S. economy tumbled at a 5.5 percent pace in the first quarter, but appears to be doing better now.

Its not that hard to fudge these numbers as BO & The Mainstream has failed to give the People the rest of the story. The hidden inflation & cap/trade epa charges being passed on to the consumer.

Check your grocery store. For example I would buy a pkg of (6) frozen sausage & egg croissant type patties for 5.96. Now they've replaced them with different packaging 4 at a special price of $5.96. There are several other items that have either gone up in price or the product has been downsized for the same or inflated price.

Your energy, building & food materials have been raising significantly while at the same time the additional cap & trade have been attached to other products.

Pretty slick trick how your BO bunch of bandits have been pulling off on us, while bailing out all the other outlaws running this country. The News Media is next to be bailed out so they have to downplay the inflation scenario. Its here now and its happening to us. Time save our money and to Boycott the BO cheats. Money talks - it don't sing & dance & it don't walk. Hit them where they've been cheating us in the wallet. SO Sad!

[gold_standard]

"The highest rate since World War II was 10.8 percent at the end of 1982"

The formula for calculating unemployment was changed during Clinton's term in 1988. If we used the same formula to calculate unemployment as 1982, the current rate would be about 18%.

The government lies with statistics by cooking the numbers to look the way they prefer.

[debinok1]

Just because it wasn't as bad as they thought doesn't mean it is good. They need to accept that this recession is headed for a depression and stop trying to get the public to buy into their hype.

[rushlimpdrug]

So it wasn't 5.7?

It was only 5.5?

Great, I'll tell my unemployed friends and relatives
the great news.

I will also tell the people asking for money on the
street corners, that should really make them feel
good.

[specialty8]

You won't see to many Obamabots on this post. Two weeks ago they said everything is getting better with the stock market, strange they have no comments now, because they fell for the sucker market. Most real economist warned of this, and it was not Turbo Timmy.

[whitemale08]

Looks like the bailouts didn't work.

Goldman Sucks and JP Morgan are laughing at the American taxpayer all the way to the bank....hahaaaaa lmao hahahaaaaaaaaaa

SUCKER!!!!

[despido]

C'mon CBS - its been over an hour since the jobs report was released. Do you report News - or History?