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The US economy now appears to have grown at its strongest rate in 2 years during Q-3, rebounding from a steep downturn that began in December 2007, according to survey of top economists released Saturday. Private economists polled October 5-6 for the Blue Chip Economic Indicators October survey said gross domestic product grew at an annualized rate of 3.2% in the Q, up 0.2 percentage point from what they estimated a month earlier. GDP shrank in Q-2 at a 0.7% annual rate. Q-3 growth was fired by a rebound in personal consumption expenditures, the first increase in residential investment since the final quarter of 2005, and a reduced rate of business inventory reduction, the survey said. Read more

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Japan’s gross domestic product (GDP) achieved the first growth in five quarters in the Q-2, indicating that the world’s second largest economy has climbed out of recession. According to a preliminary report released by the cabinet office Monday, the Japanese economy grew by an annualized 3.7% in real terms in the April-June period, the first rise since the Q-3 Y 2008 when Japan, along with the 15-nation Euro-zone, sank into its first recession in seven years as the global financial crisis took a heavy toll on the world’s second largest economy and curbed demand for its exports.. The expansion in GDP, which was lifted by consumer and government spending, came following a revised annualized 11.7% plunge in the previous quarter and a revised 13.1% dive in the October-December quarter of 2008. On a quarter-on-quarter basis, the economy rose 0.9% in the Q-2, said the office in a preliminary report. Meanwhile, consumer spending was up 0.8%quarter-on-quarter in real terms while corporate capital spending dipped 4.3 percent, according to the report. Public investment jumped 8.1% , pushed by the government’s fiscal stimulus packages to fight the recession, compared with a 9.5% fall in housing investment.

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The sharp decline in the US economy is ending and recovery will come about slowly according to a report released by the International Monetary Fund (IMF) yesterday.

In an annual report on the world’s largest economy, IMF stuck to its earlier forecasts that the US GDP will contract by 2.6% in 2009 and then rise by 0.8% in 2010.

Due to the large monetary and fiscal stimulus and wide range of measures to restore the financial stability, “the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened,” the IMF said in its report after the Article IV annual consultation with US officials. However, “financial strains are still elevated and the outlook remains for only a gradual recovery, with risks still tilted to the downside,” it said.

Also on Friday, the US Commerce Department reported that the US economy fell at a more subdued 1.0% pace in the Y 2009 Q-2, a strong signal that the worst recession since the Great Depression has eased, and is coming to a close.

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The US economy contracted slightly less than initially estimated in the Q-1, while corporate profits rebounded, according to a government report on Friday that hinted the recession was moderating. Gross domestic product, which measures total goods and services output within US. borders, dropped at a 5.7 % annual rate, the Commerce Department said, less than the 6.1% estimated by the government last month. The economy contracted at a 6.3% pace in Q-4. While the drop in economic activity was still steep and slightly worse than market expectations for a 5.5% fall, recent data have indicated that the rate of the slowdown was easing and growth could resume by year-end. Output has declined for three straight quarters for the first time since 1974-1975. “The recession is easing. The second quarter is shaping up to be a smaller decline of about 3.0 to 3.5%. It should be the last of the negative quarters,” said Christopher Low, chief economist at FTN Financial in New York.

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The USA’s trade deficit is collapsing at the fastest rate on record, a testament to the ability of a worldwide recession to sharply reduce global economic imbalances that had grown to unprecedented size. The United States estimated this week that the trade deficit, as a percent of GDP fell to 2.4% in Y 2009 Q-1, the smallest deficit in a decade. Declining trade deficits in the United States are likely to be matched by falling trade surpluses in countries that have historically been net exporters. That is one reason Germany’s economy appears to be slowing and China has embarked on a huge economic stimulus program of its own that appears to be working. The shrinking trade deficit is not being caused by a rebound in American exports. They are falling as well, but not nearly as much as imports are declining.

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The U.S. economy shrank in the Y 2008 Q-4 at its fastest rate since 1982 after a massive decline in inventories held by companies, according to official figures released on Friday.

Economists said that given bleak near-term prospects for consumption and investment, the US faced its worst economic downturn since the second world war, with even the US$787B stimulus plan signed by President Barack Obama earlier this month promising little immediate relief. “Finally the GDP data have caught up to the severity of the recession and, unfortunately, we expect the first quarter report to show similar weakness to the fourth quarter,” wrote an economist.

Updated data showed US gross domestic product contracting at an annualized rate of 6.2% in Y 2008 Q-4, below both the first estimate of a 3.8% c fall and economists’ predictions of a revision to a 5.4% decline. The biggest reason for the contraction was a revision to inventories, which are estimated to have fallen by US$19.9B rather than up by US $6.2B, shaving 1.1% points off the final figure.

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