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Smaller GDP Drop Positive Sign
Sunday, 30 August 2009 00:00

Real Gross Domestic Product, the output of goods and services produced by labor and property in the U.S., dropped at an annual rate of 1 percent in the second quarter of 2009, a much smaller decrease from the first quarter's fall of 6.4 percent. This is a broad indicator that the economy is slowly getting better.

According to a report released by the U.S. Department of Commerce's Bureau of Economy Analysis, the smaller decrease in GDP is a result of smaller contractions in nonresidential fixed investment, in exports, in private inventory investment and residential fixed investment. The improvement from the first quarter is also due to an upturn in federal government spending, as well as in state and local government spending that were partly offset by a much smaller decline in imports and a downturn in personal consumption expenditures.

A monthly survey of 51 economists published earlier this month by Blue Chip Economic Indicators say the GDP will turn positive in the third quarter. Although 2009 overall will still show negative growth, 2010 will see a positive GDP growth, they predict. The bureau reported a decrease of 5 percent in exports of goods and services during the second quarter, compared with a drop of 29.9 percent in the first quarter. In addition, imports slipped 15.1 percent, versus a decrease of 36.4 percent in the first quarter.

Real Gross National Product, which measures the goods and services produced by the labor and property supplied by U.S. residents, was down 0.8 percent in the quarter, compared with being down 6.6 percent in the first., 8/30/2009