Celebration is Premature: The Economy is Still Contracting

Over the last two weeks, the main-stream media and the stock market have greeted new economic data released by the Commerce and  Labor Departments with enthusiasm. Although these data show that the recession is not deepening as fast as it had been during previous months, they still show that the economy is contracting. GDP Numbers. On July 31, the Commerce Department's Bureau of Economic Analysis released preliminary GDP data for the second quarter (March through June) of 2009. These new data showed that the economy contracted at a 1.0% rate of decline during the second quarter. This was considered good news because the economy has been contracting at a 3.9% clip over the last year. Leading the decline was a 29.3% rate of decline in residential investment, an 8.9% rate of decline in business investment, and a 1.2% rate of decline in consumption expenditures.Unemployment Numbers. The other "good news" was released on August 7 by the Department of Labor's Bureau of Labor...(Read Full Article)