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August 28, 2009

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Home » Business » Economy

US economic slump may be ending

THE United States economy shrank at an annual rate of 1 percent in the spring, a better-than-expected showing and more evidence that the recession is drawing to a close.

Many analysts believe the economy is growing in the current quarter, but they caution that any rebound will not be accompanied initially by rising employment. Jobless claims figures released yesterday were better than expected, but remain well above levels associated with a healthy economy.

The Commerce Department's new estimate for the gross domestic product was unchanged from the initial figure it released last month. The drop, while representing a record fourth consecutive decline, was far smaller than the previous two quarters. It also was stronger than the 1.5-percent decline that private economists expected.

The report yesterday found that businesses slashed their inventories more than first reported and cut back more sharply on investment in new plants and equipment. But those reductions were offset by revisions that showed smaller dips in consumer spending, exports and housing construction.

The 1-percent rate of decline in the April-June quarter followed drops of 6.4 percent in the first quarter and 5.4 percent in the final three months of last year, the sharpest back-to-back declines in a half-century. The four straight quarterly drops in GDP mark the first time that has occurred on official records that date to 1947.

The Labor Department yesterday said first-time jobless claims fell to a seasonally-adjusted 570,000, from an upwardly revised 580,000 a week ago.


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