Jun 25: GDP Contracts 5.5%

Initial Claims increased by 15,000 to 627,000 for the week ending 6/20 from 612,000 the previous week (revised upward from 608,000), breaking the 5 week trend of steadily decreasing numbers.  Filings were expected to be reported at 608,000 by analysts.  The 4-week moving average was 617,250, an increase of 500 from the previous week’s revised average.  Reduced filings for the week ending 6/13 were cited from increased layoffs in construction, service, transportation, trade, service, manufacturing, and transportation industries predominantly in Florida (+8,383) and Pennsylvania (+3,191) which were more offset by reduced layoffs in automobile, construction, trade, services, and transportation industries in Michigan (-5,414), New York (-5,299), North Carolina (-4,714), Tennessee (-4,414), Ohio (-3,802)m and South Carolina (-3,492). Seasonally adjusted insured unemployment last week (ending 6/13) was 6,738,000, an increase of 29,000 from the preceding week's revised level of 6,709,000, maintaining the insured unemployment rate down to 5.0%.

GDP (final) contracted by 5.5% in the first quarter to $ 14,097.2 in current dollars, revised downward from the BEA’s preliminary Q1 estimate of a 5.7% contraction after falling 6.3% in the 4th quarter of 2008.  The decrease in GDP in the 1st quarter reflected negative contributions from exports (down 30.6%), equipment and software, private inventory investment, nonresidential structures, and residential fixed investment which were partly offset by a positive contribution from personal consumption expenditures which composes nearly 2/3 of the gross domestic product. Imports (down 36.4%), which are a subtraction in the calculation of GDP, decreased.  Coupling the decrease of the 1st quarter with the 4th quarter, this is the worst contraction of GDP this country has experienced in over 60 years.

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