The world's largest economy, the US, is now in recession for 18 straight months, one of the longest since the 1930s Great Depression, amid rising hopes of an early economic revival.
The American economy has been in recession for one and a half years, even as the battle for economic revival centred on bailout programmes continues to progress.According to non-profit research organisation National Bureau of Economic Research, the US officially slipped into recession in December 2007.
The hopes of green shoots of recovery for the economy have been sparked by the US Federal Reserve's observation that the pace of economic contraction has slowed in recent times.
Moreover, the number of initial claims for unemployment benefits has fallen by 14,000 to 6,31,000 last week, signalling a possible thaw in the country's strained labour market. Still, the latest official data showed that US GDP shrank at a staggering pace of 6.1% in the first quarter of 2009. Nonetheless, consumer spending climbed during the same period.
The US Fed, while keeping the key rates unchanged in the range of 0 to 0.25%, noted that the economy is shrinking at a slower pace.
"Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower.
"Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit," the Fed said in a statement this week.
To boost the nation's sagging economy, the Federal government has unveiled unprecedented measures including the mega $700-billion bailout package and buying stakes in financial entities.
In addition, the Obama administration recently came up with a public-private partnership plan, which is aimed at mopping up toxic assets worth $1 trillion from the financial system. The US has also become strict on executive compensation on Wall Street and has introduced pay restrictions on companies receiving taxpayers money.
Meanwhile, in the fourth quarter of 2008, American GDP contracted the most in 26 years at 6.3%.
