Boosted by stimulus checks from Uncle Sam and a big drop in imports, real growth in the U.S. economy accelerated in the second quarter to a 1.9% annual rate, the Commerce Department reported Thursday.
The U.S. economy contracted in the fourth quarter of 2007, the first quarter of negative growth since the 2001 recession, the Commerce Department said Thursday in its annual revision to gross domestic product.
Real GDP fell 0.2% in the quarter; a 0.6% increase had previously been reported. Many economists who think the economy is in recession believe it began in the fourth quarter.
Growth in the first quarter of 2008 was revised down a tenth of a percentage point to 0.9%. The economy grew 1.9% in the second quarter, the department said.
So we’ve actually had a quarter of contraction. The story goes on:
It’s a common (but mistaken) belief that a recession is defined by two consecutive quarters of negative GDP.
The actual working definition is “a significant decline in economic activity lasting more than a few months,” usually seen in GDP as well as monthly data on job growth, income growth, industrial output and business sales. All four of the monthly indicators are flashing recession signs.
I guess I’d like to see a better definition than something based on “significant” and “a few months.” Maybe the technical definition is more specific.
It will be interesting to see if everyone who said that the reported 0.6% growth was so small that it didn’t matter will also say that the 0.2% contraction doesn’t really matter.
Obviously, the economy isn’t in very good shape right now.