It may be time to start planning vacations and Friday nights out again: people who know much more than I do are starting to report figures that indicate the economy might finally be on the rebound.
On Friday, July 31, the U.S. Commerce Department’s Bureau of Economic Analysis reported that Q2 Gross Domestic Product (GDP) was down 1%, a number that in another time would have been seriously alarming but today is cause for celebration. To wit: in Q1 2009 the economy was down a whopping 6.4%. Financial reporters on Friday could barely contain their glee in reporting only a 1% decline.
Correspondingly, other economic indicators are looking up as well. On Monday, Aug. 3, the Institute of Supply Management said its manufacturing index had increased to 48.9%, “putting it on pace to cross 50% this month,” according to ConsumerReports.org. That over-50% mark means expansion, which means end of recession, although keep in mind that figure only addresses manufacturing. The entire economy needs to start consistently expanding in order for the recession to be considered over.
In addition, the S&P 500 went over 1,000 today, a 50% increase in value from its low of 666 (definitely the sign of the beastly economy) in March, also according to ConsumerReports.org.
Still, if things have felt pretty bad to you for the past year, another set of figures came out last Friday that explain why: “The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing,” showed revised figures from the U.S. Department of Commerce, according to Bloomberg.
Bloomberg’s article goes to report that “the world’s largest economy contracted 1.9 percent from the fourth quarter of 2007 to the last three months of 2008, compared with the 0.8 percent drop previously on the books. Gross domestic product has shrunk 3.9 percent in the past year, indicating the worst slump since the Great Depression.”
Unemployment also remains at 9.5%, a 26-year low, but as Treasury Secretary Tim Geithner said on ABC’s This Week on Sunday (Aug. 2), employment is usually one of the last figures to start trending upward.