Output in the economy, measured by the inflation-adjusted (real) gross domestic product
(GDP) fell at a 1.0% annualized rate in the 2nd quarter, an improvement from -6.4% in the
1st quarter, -5.4% in the 4th quarter of 2008, and -2.7% the 3rd quarter of 2008. The four
consecutive quarterly declines in GDP is a post World War II record string of declines. The
unemployment rate rose to 9.5% in June and is up by 4.6 percentage points since the start
of the recession. Non-farm payroll employment fell by 467,000 jobs in June, above May’s
losses of 322,000 jobs but more moderate than the average decline of almost 700,000 in
the first three months of this year. The economy remains sluggish, but incoming data show
signs of repair; the paces of decline in output is diminishing; the housing market is showing
signs of stabilization; and home price declines have subsided (by some measures, prices
have shown some recent increases). Arresting the declines in home prices and resulting
declines in household wealth is important for an economic recovery. However, with more
and more households experiencing unemployment, home foreclosures continue to grow.