US economy shrinks 1% in second quarter

Sparking hopes of economic recovery, the US economy shrank much less than expected at 1 per cent in the second quarter of 2009, mainly due to higher government spending and lesser decline in exports.

The country's GDP was expected to fall about 1.5 per cent in the second quarter.

"The real gross domestic product -- the output of goods and services produced by labour and property in the country -- fell at an annual rate of one per cent in the second quarter of 2009," the advanced estimate from the US Department of Commerce showed today.

Further, the GDP contraction is lower than the past six months when the economy shrank at an average of nearly 6 per cent.

In the first quarter, real GDP declined 6.4 per cent whereas earlier it was estimated to have shrunk 5.5 per cent.

With the GDP contracting at a lesser pace, the recession in the world's largest economy seem to be easing.

According to the Department of Commerce, the "much smaller decrease in real GDP in the second quarter" was mainly due to smaller decreases in non-residential fixed investment, in exports and upturns in federal government spending, among others.

For the three months ended December 2008, the American GDP fell more than 6 per cent.