US Economy Shrinks
Friday, May 1, 2009 12:33
The world’s biggest economy—US economy, has suffered the worst slump ever since Dwight D. Eisenhower was president and Elvis was doing his national service. Following a 6.3% fall in the final three quater of 2008, the economy shrank a worse-than-expected 6.1% in the first three months of the year.
Figures came as reports emerged that at least six of the 19 largest US banks require additional capital. The government has been conducting ’stress tests’ to determine how much extra money the lenders need, however, these have been criticised for further undermining confidence. The GDP report yesterday contained a blizzard of grim data, but the weakness of businesses was particularly striking. Companies slashed investment in new equipment and software by 33.8%. Sagging defence spending pulled government expenditure down by the most ever since 1995.
The only positive thing in the report was an improvement in family incomes and spending, reflecting interest-rate cuts by the US Federal Reserve and demand after a grim holiday shopping season.
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