The contraction in gross domestic product, which was smaller than estimated last month, capped the worst six-month performance in half a century, revised figures from the Commerce Department showed today in Washington. A report from the Labor Department showed jobless claims climbed last week.
Reports this quarter showed housing and consumer spending have stabilized, signaling the recession may soon end as government and Federal Reserve stimulus efforts take hold. Fed officials yesterday acknowledged the contraction was slowing while maintaining the economy may remain weak for a time” as unemployment rises and credit stays tight.
This is the last of three estimates the government issues on economic growth. The world’s largest economy shrank at a 6.3 percent annual rate from October to December.
The number of Americans filing claims for unemployment benefits unexpectedly rose last week and the total number receiving payments increased, indicating the labor market may take longer to stabilize. Initial jobless claims rose by 15,000 to 627,000 in the week ended June 20, from a revised 612,000 the week before, the Labor Department said today in Washington.
Consumer spending, which accounts for about 70 percent of the economy, rose at a 1.4 percent last quarter, less than previously estimated. Purchases dropped at a 4.3 percent annual rate in the final quarter of 2008, the biggest slump since 1980.
The trade deficit from January through March was estimated at $296.8 billion, down from the $302.6 billion projected last month. A narrowing from the prior three months contributed 2.4 percentage points to growth.
Figures released so far indicate trade will again contribute to GDP this quarter, though not as much as in the first three months of the year, economists said.
Residential construction dropped at a 39 percent pace last quarter, the most since 1980, today’s report showed.
The housing slump, now in its fourth year, is easing. Builders broke ground on more homes than forecast in May, with single-family starts posting a third straight gain. Sales of previously owned houses rose for the second consecutive month.
Business investment also collapsed last quarter, shrinking at a 37 percent annual pace, the biggest decline since records began in 1947. Orders for capital goods excluding aircraft, a proxy for future spending on new equipment, jumped in May by the most since 2005, Commerce reported yesterday.