Tags: gdp | contract

Economists: Economy Will Contract, Just Less

By    |   Tuesday, 28 Jul 2009 12:22 PM

The U.S government will likely report Friday that the economy contracted by 1.5 percent during the second quarter of this year.

While the figure would seem dreary on a nominal basis, it actually notes a noticeable thaw in the recession, economists say.

The economy shrank by 6.3 percent during the fourth quarter of last year and then by another 5.5 percent during the first three months of this year, which dwarfs what's expected for the second quarter, The Wall Street Journal reported.

"Policy makers seem to have collectively succeeded and we're going to avoid the big 'D,'" said Robert Barbera, an economist at research and trading firm ITG.

Consumers and businesses are still cutting back on spending, but they're doing it with less severity than in the past.

Improving economic figures are fueling feelings that the end of the recession is near, and stock prices reflect those sentiments.

The Dow Jones Industrial Average last week topped 9,000 for the first time since January, as home sales showed signs of improvement.

And some say that even though rough times still lie ahead, the market is not reflecting some sort of irrational investor euphoria.

"I don't think the market is signaling that we are fully healed at all but it is telling us that there is a strong likelihood that a recovery is under way," Ciaran O'Kelly, head of equities, Americas, at Nomura Securities Intl. Inc. in New York, told the Associated Press.

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The U.S government will likely report Friday that the economy contracted by 1.5 percent during the second quarter of this year. While the figure would seem dreary on a nominal basis, it actually notes a noticeable thaw in the recession, economists say.The economy shrank by...
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2009-22-28
Tuesday, 28 Jul 2009 12:22 PM
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