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NewsFlash: April 30, 2008

GDP report grim, recession clear

This morning’s report that U.S. Gross Domestic Product (GDP) grew at a miniscule rate in the last quarter — just 0.6% — is more bad news for the economy, according to economist L. Josh Bivens of the Economic Policy Institute. Nearly all the indicators in the report are grim. Despite the barely-positive growth, we are almost certainly in a recession, he said.

As Bivens notes this morning:
“There’s nothing magical about staying above zero. In fact, annual growth of less than 2.5% is a recipe for rising unemployment. We’re already seeing this in three consecutive months of job loss, and considering the GDP numbers released this morning, we’ll surely see more in the coming months.”

“Almost everything in this morning’s report was worse than the bad 4th Quarter report: consumption, net exports, residential investment, non-residential real estate, equipment and software spending, and, state and local government spending all decelerated or even shrank. Only increased federal government spending and a huge build-up of inventories kept growth positive in the first quarter.”

Read Bivens’ full analysis of the GDP report in today’s GDP Picture.

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