Daily Forex News

Economic shrinkage is less than expected

The U.S. economy contracted by 1% in Quarter 2 of 2009. However, this is a smaller contraction than expected. Analysts had expected more shrinkage in the economy, reports the Financial Times:

Wall Street analysts were expecting a contraction of 1.5 per cent, but the downward revision from the original previous quarter estimate of a 5.5 per cent drop dampened optimism. …

“Even though it’s negative, we’re not seeing the horrendous numbers we saw earlier in the year or in early 2008,” said Brian Bethune, an economist at IHS Global Insight.

The news has stoked some optimism. Even though the stock market opened lower, it has since moved into positive territory, heading higher as the news sinks in. The U.S. dollar, on the other hand, is moving lower.

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