As the AP reported late Thursday, the US economy skirted a recession posting a 0.9% increase in Gross Domestic Product (GDP). According to analysts, a recession is defined as two straight quarters of negative growth. One key factor in keeping the US economy out of recession — exports — helped pull up GDP. Although exports grew by 2.8%, analysts had expected stronger growth. Moreover, exports in the previous quarter had grown by 6.5%. Unfortunately this does not bode well for the second quarter as exports and business inventories were the key variables propping up the numbers.
The hope is that the economy will pick up in the third quarter from the positive effects of tax rebates and lower interest rates. The big question is how much the slowing economies of Europe and Japan will have on US exports. According to the AP report, economists are also very concerned about inflation, particularly oil, food and energy prices. But if steel prices have peaked, as we have reported and predicted in early 2008 predicted in early 2008, perhaps some of the inflationary pressures will ease and we can all catch our breath.