United Liberty

The last day of the month brings what looks like good news for the economy:

The U.S. economy shrank at a more subdued pace this spring, the government said Friday morning, as the steep downdraft of the winter gave way to a more orderly contraction.

Gross domestic product, the broadest measure of economic activity, fell at a 1 percent annual rate in the April through June quarter, the Commerce Department said. That compares with a 6.4 percent pace of decline in the first quarter, a revision from an earlier estimate of a 5.5 percent rate of decline.

The slower decline in GDP, which measures the value of goods and services produced within U.S. borders, supports the notion that the economic decline is tapering off. Economists had expected a second-quarter contraction of about 1.5 percent.

Of course, there are caveats:

Personal consumption expenditures fell at a 1.2 percent annual rate in the second quarter, suggesting that consumers remain highly cautious about making purchases. That measure had been positive in the first quarter, and fell between April and June despite government policy that cut payroll taxes in a bid to stimulate the economy. Because consumer spending accounts for about two-thirds of economic activity, analysts believe that consumers ultimately must return to stores for a true recovery to take hold.

And you might want to think twice before completely trusting the numbers released today:

The Commerce Department also released revisions to GDP for the past five years, using more extensive data than was previously available.

The fourth quarter of 2007, thought to harbor the beginning of the current recession, was not as economically gloomy as previously thought, according to new data from the Bureau of Economic Analysis. GDP improved at an annual rate of 2.1 percent in that quarter, according to the new data. That’s up from a previously reported decline of .2 percent.

New data show GDP first turning negative in the beginning of 2008. GDP declined at an annual rate of .7 percent in the first quarter of last year, a considerable drop from the .9 percent improvement that was previously reported. In fact, economic problems in 2008 ran deeper than had been thought, the government’s data show. GDP grew only .4 percent in 2008, down from a previous estimate of 1.1 percent.

(…)

While the second quarter of 2008 remained positive, the third quarter proved to be considerably worse than reported earlier, showing a decline of 2.7 percent. GDP during the fourth quarter declined at an upwardly revised annual rate of 5.4 percent, still a remarkably steep drop, though slightly better than the 6.3 percent decline reported earlier.

So, you know, take these numbers with a grain of salt.