US economic downturn losing steam

May 8th, 2009 - 6:50 pm ICT by IANS  

Lehman Brothers Washington, May 8 (IANS) It might be too early to celebrate but the severest recession in the US economy, impacting the world, is showing signs of losing steam with encouraging signs on various fronts this week.
Among positive indicators, the number of first-time jobless claims fell sharply and bargain-hungry shoppers gave a boost to April sales for discount retailers, and a report showed the pace of decline in the service sector slowing, the Washington Post reported Friday.

These signs come after Federal Reserve chairman Ben S. Bernanke’s somewhat optimistic assessment of economy Tuesday.

“The bottom is forming,” Joel L. Naroff, president of Naroff Economic Advisors, told the Post. “It doesn’t say we’re out of the woods… but I think things are turning.”

However, analysts pointed out that though the panic following the collapse of Lehman Brothers is over, a recovery is still months away and is likely to be slow and unemployment could keep rising for a while even after the recession ends.

While the Labor Department said first-time jobless claims dropped to 601,000 last week, Arpitha Bykere, lead analyst for RGE Monitor, said the figure is likely to remain over 500,000 for a while even if it continues to fall.

Despite such warnings on various fronts, many economists are now hopeful, the post added.

Bernanke this week underlined that optimism when he said the economy’s “pace of contraction may be slowing”, consumer demand “may be stabilising” and the housing market has “shown some signs of bottoming”.

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