The recent recession was deeper than previously thought, according to new data released by the Commerce Department. The numbers show the sharpest declines in consumer spending and the housing market.
The U.S. economy shrank 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009, compared with the 3.7 percent drop previously reported, said Bloomberg News.
Household spending fell 1.2 percent in 2009, twice the previous projection. Consumer purchases, which account for 70 percent of the economy, shrank the past three years, with the lowest spending point being last year, said Bloomberg.
Personal and disposable income levels actually rose between 2007 and 2009, according to the Commerce Department report. Higher income and less spending indicate American’s are putting more of their money into savings.
Economist Stephen Stanley told Bloomberg that consumers are adjusting to a “more rational spending philosophy.”
In a piece of good news, the economy grew 2.4 percent annual rate from April through June this year, according to the Commerce Department. The rate of expansion in the first quarter was 3.7 percent, higher than the 2.7 percent gain previously predicted.
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