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April 30, 2008
No Recession yet...officially
Many economists say that we aren't in a recession until there are two consecutive quarters of negative growth.
Using that barometer, the figures on GDP released today would seem to indicate that the economy is still growing albeit very, very slowly: The bruised economy limped through the first quarter, growing at just a 0.6 percent pace as housing and credit problems forced people and businesses alike to hunker down.
The country's economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday. The statistic did not meet what economists consider the definition of a recession, which is a contraction of the economy.
This means that although the economy is stuck in a rut, it is still managing to grow, even if slightly. Many analysts were predicting that the gross domestic product (GDP) would weaken a bit more -- to a pace of just 0.5 percent -- in the first quarter. Earlier this year, some thought the economy would actually lurch into reverse during the opening quarter. Now, they say they believe that will likely happen during the current April-to-June period.
Not exactly a stellar performance from the economy but better than expected - at least until the revised numbers come out in a couple of months. At that point, the numbers may indeed reflect negative growth in the economy and make a recession likely.
But many analysts are holding fire on declaring a recession is in progress. Job growth has suffered as well as consumer confidence but the underlying economy remains strong. Considering how many hits the economy has taken with rising gas prices, a securities crisis, a housing meltdown, and politicians screaming about how bad things are, it is remarkable that the economy performed as well as it did.
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