The U.S. economy fell at a more subdued 1.0 percent pace in the second quarter, a strong signal that the worst recession since the Great Depression has eased.
The U.S. GDP tumbled at a staggering 6.4 percent pace in the first quarter, the most in past three decades, a revision from an earlier estimate of a 5.5 percent rate of decline. The second-quarter fall, the fourth straight quarterly decline, was much better than the 1.5 percent annualized contraction that experts had expected, the Commerce Department reported Friday.
The U.S. GDP tumbled at a staggering 6.4 percent pace in the first quarter, the most in past three decades, a revision from an earlier estimate of a 5.5 percent rate of decline.
GDP is a measure of all goods and services produced in the economy. Its biggest component is consumer spending.
"The decrease in real GDP in the second quarter primarily reflected negative contributions from nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, private inventory investment, and export that were partly offset by positive contribution" from government spending, the Commerce Department said while releasing the report.
"Imports, which are a subtraction in the calculation of GDP, decreased," it added.
In the second quarter, consumer spending, which accounts for about two-thirds of the economy, decreased at a 1.2 percent pace, following a 0.6 percent increase in the first quarter.
Motor vehicle output added 0.20 percentage point to the second-quarter change in GDP after subtracting 1.69 percentage points from the first-quarter change.
Business spending decreased 8.9 percent in the second quarter, compared with a decrease of 39.2 percent in the first. Nonresidential structures decreased 8.9 percent, compared with a decrease of 43.6 percent.
Equipment and software decreased 9.0 percent, compared with a decrease of 36.4 percent.
Real residential fixed investment, which includes spending on housing, decreased 29.3 percent, compared with a decrease of 38.2 percent, demonstrating the sector continued to be a drag on the overall economy.
Real final sales of domestic products, a key figure that strips out inventory adjustments, deceased at a 0.2 percent rate in the second quarter. First-quarter sales fell by 4.1 percent.
Trade acted as a boost to GDP in the second quarter, adding 1.38 percent points.
Exports decreased 7.0 percent in the second quarter, compared with a decrease of 29.9 percent in the first, while imports decreased 15.1 percent, compared with a decrease of 36.4 percent.
Meanwhile, the federal government boosted spending at a pace of10.9 percent after declining 4.3 percent in the prior quarter, the most since the third quarter of 2008.
State and local governments increased spending at a pace of 2.4percent, the most since the second quarter of 2007.
The GDP report is the first for the quarter and will be revised in August and September as more information becomes available.
Many economists believe that the recession, began in December 2007, has been at or near its end. They predict the economy might expand in the current July-September quarter.
U.S. Federal Reserve Chairman Ben Bernanke has predicted that the recession, now the longest since World War II, will end later this year.
U.S. Commerce Secretary Gary Lokce welcomed the better-than-expected data in the second quarter.
"Today's GDP numbers demonstrate that we making real progress in ending this recession. Leading indications of activity are pointing up, and the housing sector appears to be stabilizing," he said. "As more stimulus dollar hit the street, we should make headway in improving the difficult employment and financial conditions in many hard-hit regions of the country."
U.S. President Barack Obama said on Thursday that he expects U.S. economy will continue to shrink during the second quarter, but noting there are no longer fears of another Great Depression.
"All of that is a sign that we have stepped away from the precipice," he said. "We were in a position where we could have gone into a great depression. I think those fears have abated."
Also on Friday, the International Monetary Fund concluded that the sharp decline in the U.S. economy "was ending," but recovery "was likely to be sluggish."
Due to the large monetary and fiscal stimulus and wide range of measures to restore the financial stability, "the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened," the IMF said in its annual report after the Article IV annual consultation with U.S. officials.
However, "financial strains are still elevated and the outlook remains for only a gradual recovery, with risks still tilted to the downside," it said.
VietNamNet/Xinhuanet
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