The Commerce Department has released the adjusted GDP numbers from January to March: The economy contracted at a 5.7 percent annualized rate. Since this is the second of three attempts to measure the growth rate during that period, you get a weird effect where it turns out the country did slightly better than we had previously thought we did in the past but slightly worse than we had estimated a new projection about the past might reveal (whew!) :
The Commerce Department's updated reading on gross domestic product, released Friday, showed the economy's contraction from January to March was slightly less deep than the 6.1 percent annualized decline first estimated last month. But the new reading was a tad worse than the 5.5 percent annualized drop economists were forecasting.
Economists are estimating the contraction will lessen to a little under 2 percent in the next quarter (right now), and that we'll start seeing some small growth in the third or fourth quarter. But while GDP is an important indicator, the critical measure in is always employment:
Many economists say the jobless rate will hit 10 percent by the end of this year. Some say it could rise as high as 10.7 percent in the second quarter of next year before making a slow descent.
This seems like a good time to suggest you visit the Center for Economic and Policy Research's third stimulus honor roll, a list of economists who believe a third stimulus package is necessary (Obama's was the second, Bush signed a small, tax-refund based stimulus plan in spring 2008). Whether or not the policy is sound, I have a hard time believing Congress would appropriate further money for a stimulus without the situation getting even worse than expected. But if in the next year the financial system stabilizes further and TARP funding starts getting returned or going unused, perhaps that could offset the costs of a small third stimulus.
-- Tim Fernholz
