U.S. Recession: Is this the beginning of the end . . . or end of the beginning?

“The worst U.S. recession in five decades probably eased in the second quarter as trade and government stimulus mitigated the damage from declines in housing, inventories and consumer and business spending, economists said before a report this week.

The world’s largest economy shrank at a 1.5 percent pace following a 5.5 percent drop in the first three months of 2009, according to the median forecast of 66 economists surveyed by Bloomberg News ahead of Commerce Department figures due July 31. Other reports may show orders for long-lasting goods fell and sales of new houses rose.

Leaner stockpiles set the stage for a return to growth this quarter as manufacturing and homebuilding stabilize, while efforts to revive demand globally boost exports. Consumer spending, which accounts for 70 percent of the economy, may be slower to recover as unemployment is projected to keep rising and home values are likely to fall further.

‘The recession is entering its final hours as the credit markets have mended and the record fiscal stimulus works its way through the system,’ said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ‘This could well be the last quarterly decline of real GDP for this recession. The outlook is a positive one for the second half of the year.’

A drop last quarter would be the fourth consecutive decrease in GDP, the longest losing streak since quarterly records began in 1947. The decline so far has been the deepest since 1957-58.”

“The economy will grow at an average 1.5 percent rate in the last six months of the year, according to economists surveyed by Bloomberg in the first week of July. Unemployment, which reached a quarter-century high of 9.5 percent in June, will top 10 percent by the first three months of 2010, the survey showed.

The projections are in line with estimates by Federal Reserve policy makers.

‘The pace of decline appears to have slowed significantly, and final demand and production have shown tentative signs of stabilization,’ Fed Chairman Ben S. Bernanke told Congress last week. ‘The labor market, however, has continued to weaken.’”