The Commerce Department estimates the U.S. economy shrank at 1% annualized rate in the second quarter of 2009. That’s better than the -1.5% growth predicted, but it’s a little like your doctor saying that the massive arterial bleeding has slowed down now (after an hour) so we probably won’t need that tourniquette. The U.S. economy has now contracted four quarters in a row, the worst streak since the Great Depression
- GDP has contracted 3.9% in the last year, the worst fall since at least 1947, when the Commerce Department started keeping track
- First quarter GDP was revised down from -5.5% to -6.4% — the biggest quarterly GDP drop in almost 30 years
- The Commerce Department revised 2008 down too, from -0.4% annual growth to -1% growth (being wrong by a factor of 2.5x, man I couldn’t get a pass in school doing that badly)
- Consumer spending, 70% of U.S. GDP, contracted 1.2%. The retrenchment was largely replaced by government spending, up 10.9% (with freshly-minted fiat bucks! No inflation threat there)
- Employment compensation rose by just 1.8% over the last 12 months, the slowest rate on books that go back to 1982.
Looks like -1% is the new +2% growth. Sucking relatively less is no help, especially when we consider that only some 30% of the unemployed are receiving benefits (and thereby even counted as unemployed). This means a real unemployment of somewhere around 25% (or higher). Mind you, this is not equivalent to the peak of The Great Depression, where unemployment topped out at 35%. But don’t worry, that stat seems to be heading up…