GDP is the total value of all goods and services produced within the United States, and is used as a barometer of the country’s economic health.
“It’s still a shaky outlook for the economy, but no shakier than before. No one’s world view will shift. Consumer spending is very shaky now. That’s the major risk in the economy,” said Pierre Ellis, senior economist at Decision Economics in New York, quoted Reuters.
Consumer spending, which accounts for over two-thirds of U.S. economic activity, fell at a 1.2 percent rate in the second quarter after rising 0.6 percent in the previous quarter. That sliced 0.88 percentage points from second quarter GDP, the Commerce Department said.
Listen to President Obama’s comments on the new economic numbers:
The department also reported Friday that the recession inflicted even more damage on the economy last year than the government had previously thought. In revisions that date back to the Great Depression, it now estimates that the economy grew just 0.4 percent in 2008. That’s much weaker than the 1.1 percent growth the government had earlier calculated, according to the AP.
Separately, U.S. employment costs rose 0.4 percent in the second quarter, as the deep recession and high unemployment held back worker pay and benefits, a Labor Department report showed Friday.
Federal Reserve Chairman Ben Bernanke has said he thinks the recession will end later this year. And many analysts think the economy will start to grow again, possibly at around a 1.5 percent pace, in the July-to-September quarter. Although it would be slow growth, it would signal that the downturn has ended, reported the AP.