GDP report

GDP report is likely to show recession eased in 2Q WASHINGTON — The recession likely eased in the spring, with the U.S. economy no longer in free-fall. Many analysts predict that when the Commerce Department releases its first estimate of second-quarter activity Friday, it will say the economy shrank at a 1.5 percent pace from April though June. If they are correct, it would mark a vast improvement from the 5.9 percent annualized drop recorded over the prior six months — the weakest showing in 50 years.

“The recession kind of came in like a lion and is going out like a lamb,” said economist Ken Mayland of ClearView Economics. Less drastic spending cuts by businesses, a resumption of spending by the federal government and an improved trade picture factor into expectations for a better performance. Consumers, though, probably pulled back a bit. Rising unemployment, shrunken nest eggs and lower home values have weighed down their spending.

President Barack Obama said Thursday that while he thinks economic activity contracted in the spring, Friday’s report also should show that the United States has “stepped away from the precipice.” Business inventories could be the key swing number in Friday’s report. If companies slash the stockpiles on their shelves more deeply than expected, the report could show the economy suffering from an unexpectedly big contraction.