The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, signaling that the country is in worse shape than investors had anticipated.
It is in recession, It's going to widen, it's going to deepen.
The economy may weaken further as the temporary boost from tax rebates, which aided a pick-up in gross domestic product last quarter from the previous three months, fades. Stocks dropped, Treasuries rallied and traders reduced bets that the Federal Reserve will raise interest rates this year.
Gross domestic product increased at a 1.9 percent annualized rate, the Commerce Department said in Washington, compared with the median projection of 2.3 percent in a Bloomberg News survey. The Labor Department said separately that more Americans filed claims for unemployment insurance last week than at any time in more than five years.
Stocks mostly retreat on disappointing GDP reading, jump in jobless claims; Stocks mostly declined Thursday after a weaker-than-expected reading on the nation's economy and troubling news on jobs touched off renewed concerns about businesses and consumers.
Investors are also concerned by a Labor Department report that the number of people seeking jobless benefits jumped to the highest level in five years. Economists warned the weekly figures can be volatile and some dismissed them as an aberration, however.
But stocks pulled off their lows as oil declined and after an index of Midwestern business activity indicated growth.
Light, sweet crude fell $2.13 to $124.64 on the New York Mercantile Exchange after rising more than $4.50 on Wednesday. Oil has fallen about $20 since hitting a high above $147 on July 11, raising hopes that inflation pressures could ease.
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