The latest government reports show that the economy contracted at a rate of one-percent last quarter — better than expected. But the new GDP numbers showed that consumers have continued to cut spending, and unemployment is likely to continue to rise for some time. Senior Fellow Alice Rivlin says the news is good, but an end to the recession is not yet at hand.
“Today’s announcement is sort of small good news. It means that the economy is not getting worse as fast as it was and, indeed, it’s not getting worse very fast. A one percent decline is not a very serious decline, but it’s a decline. We aren’t out of the woods yet. But, most people think that the slow decline means that it’s possible that the quarter that has already started, the third quarter or the fourth quarter, will finally show some positive growth. On the other hand, one shouldn’t be too optimistic. Unemployment is still rising, and will continue to rise for quite a long time, and the economy would have to grow quite rapidly in the range of three percent to stop the fall in unemployment. So, we will have probably a very slow climb out of this recession — even when we get positive growth.”