GDP Shrinks Modestly: Is the Economy Bouncing Back?
GDP posts negative 1 percent annual growth rate.
July 31, 2009— -- The Dow Jones Industrial average was up again today, bringing the total gain for the month to 725 points, making this the best July since 2002.
The NASDAQ was up nearly 9 percent for the month, its best monthly gain for the month of July since 1997.
The U.S. economy has a long way to go before it can be described as healthy, but the good news today is that there is growing optimism -- and conviction -- that this great recession may finally be ending.
The latest Gross Domestic Product numbers -- the broadest measure of the health of the U.S. economy -- show the recession may be loosening its grip on the economy.
The government reported today that GDP posted a negative 1 percent annual growth rate for the second quarter this year. That's nothing to cheer about, but it's better than the negative 1.5 percent many economists had projected.
"It's like early in the year we jumped out of the plane," said Alan Valdes, a trader with Hilliard Lyons. "We were in a freefall. Now we have the parachute open and we're gliding down."
Today marks four consecutive quarters of negative growth for the U.S. economy, which hasn't happened for at least 60 years. But the improvement from a 6.4 percent plunge in GDP at the beginning of the year to today's 1 percent drop was dramatic.
President Barack Obama was cautiously optimistic about the numbers released today but said unemployment remains a huge challenge.
"As far as I am concerned, we won't have a recovery as long as we continue losing jobs," he said. "Today's GDP is an important sign the economy is headed in the right direction."
Economists still expect unemployment to continue rising into the next year. And as long as it does, Americans are likely to be leery about spending.
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