Is The Recession Receding?

Sep 04, 09 Is The Recession Receding?
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The economy shrank 1% during the 2nd quarter of 2009.  Economists had forecasted that the economy would shrink by 1.5%.  Because the shrinkage was significantly less than predicted, experts are whispering that the recession may be over.  Some are saying the economy could see positive growth by the end of the year.

Not all of the news is encouraging.  The labor market is one of the most lagging economic indicators.  As such, even if this is the beginning of a recovery, the labor market is expected to struggle throughout 2010.  Businesses severely slashed their inventories at the beginning of the recession.  Consequently, even if consumer demand increases in the last two quarters, businesses still will not need to hire new workers.  Employment will continue to lag.

Besides the labor numbers, other indicators are positive.  Exports, consumer spending, and residential fixed investment did not decrease as much as experts predicted.  The federal government increased spending by .1% to 11%.  The “bad news isn’t as bad as we thought” is an idea that will not comfort the majority of Americans still struggling to stay afloat in this tumultuous economy.

Consumer spending makes up the overwhelming majority of GDP (Gross Domestic Product).  There will be no real recovery until consumer confidence increases and consumers begin shopping again.  The larger signs point to a nascent recovery.  Yet, for the majority of Americans, a true economic resurgence may be a long time coming.

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