The most destructive recession since the Great Depression appears to be loosening its grip, setting up the possibility of recovery in the latter part of the year.
The US economy shrank some 0.7 percent annual rate from April through to June, in the best performance for over a year. The Government stimulus packages such as “Cash for Clunkers” and first time homebuyer credits are helping to bolster manufacturing and housing, the sectors at the heart of the economic downturn. However, the US saw a drop in GDP, the sum of all goods and services produced, for the fourth time in a row the longest contraction since quarterly records began in 1947. Consumer spending also fell but less than the government expected. The Federal Reserve plan to keep the benchmark lending rate at as close to zero as possible for an extended period and claimed that while household spending was showing signs of stabilising, it was still being dragged back by job losses and problems in getting credit.