[The American economy remained stuck in the slow lane over the first three months of the year, expanding by a modest 0.6 percent annualized rate, the Commerce Department announced Wednesday morning.
The weak performance reflected the increasingly thrifty inclinations of American consumers in the face of plummeting real estate prices, tightening credit and a deteriorating job market. Economic growth was also hampered by a continued pullback in construction and business investment.
Still the number was slightly better than expected and helped to push the major market indexes higher on Wednesday.
The only factors preventing the economy from sliding backward were the growth of American exports — aided by a weakening dollar — and a buildup of inventories by businesses. Exports and inventories set aside, final sales of American goods and services domestically dipped at a 0.4 percent annualized rate in inflation-adjusted terms, the first decline since the end of 1991.
The very fact that economic activity expanded as opposed to shrinking challenged the broad assumption that the economy is ensnared in a recession. A government-appointed panel of economists ultimately decides whether a particular patch of trouble qualifies as a recession, which is defined as a “significant decline in economic activity spread across the economy, lasting more than a few months.”
“It doesn’t get us across the chasm,” said Robert Barbera, chief economist at the research and trading firm, ITG. “It will make things look better than they are for a few months, but it doesn’t change the fundamentals. The underlying circumstances are unambiguously recessionary. It’s a fait accompli.”]-NYT
