U.S. GDP shrinks 6.1 pct in Q1, worst in 50 years

April 29, 2009 by · Leave a Comment
Filed under: Economic News 

I guess its a “buy” on Wall Street when our GDP collapses.  Interesting if you ask me.  I think I know the formula, buy on the rumor and sell on the facts except when it comes to GDP.  I sort of understand why banks might be a buy, maybe the GDP drop is part of the deleveraging process.  Well this might be a good trend if people are not consuming as much and instead are saving and investing.

News (Bloomberg):

The U.S. economy plunged again in the first quarter, making this the worst recession in at least half a century.

Gross domestic product dropped at a 6.1 percent annual pace, weaker than forecast, after contracting at a 6.3 percent rate in the last three months of 2008, the Commerce Department said today in Washington. The report, which reflected a record slump in inventories and further declines in housing, comes hours before Federal Reserve officials decide how much money to pump into the economy.

Smaller stockpiles may set the stage for a return to growth in the second half of the year amid signs Fed efforts to reduce borrowing costs and unclog lending are starting to pay off. The contraction persisted even as lower gasoline prices and larger tax refunds helped bring an end to the worst slump in consumer spending in almost three decades.

“We are likely to emerge from this recession very slowly and the recovery will be very weak,” said Richard Berner, chief U.S. economist at Morgan Stanley in New York. “The aggressive policy response we have gotten will take time to work, but it will counter the still-strong headwinds holding the economy back.”

Stocks rose for the first time in three days as bank shares rallied on an analyst report that non-performing assets will peak this year. The Standard & Poor’s 500 Index was up 2.2 percent at 873.59 as of 11:53 a.m. in New York. Treasuries were little changed, with benchmark 10-year notes yielding 2.99 percent.

Click Here to Continue Reading

 

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!