Obviously the big news is that the rate of decline eased dramatically last quarter--we only shrank by 1 percent versus 6.4 percent the previous quarter. More interesting are two details from the Commerce Department release. First, according to a revision that happens every five years, it now looks like growth last year was much worse, much earlier than we'd realized: -0.7 percent in the first quarter instead of 0.9; 1.5 in the second quarter instead of 2.8; and -2.7 in the third quarter instead of -.5. (If you look at the fourth quarter of '08 and the first of '09 together, the revision didn't really change much.) The White House has to be somewhat subtle about the way they use these data. But, at a time when the GOP is trying to make Obama the sole owner of the underperforming economy, I suspect we'll be hearing a bit about how the situation he inherited was a lot worse than anyone realized.
Second, it's interesting to note the role of that dread government spending in limiting the damage last quarter. According to the Commerce Department:
The much smaller decrease in real GDP in the second quarter than in the first primarily reflected much smaller decreases in nonresidential fixed investment, in exports, and in private inventory investment, upturns in federal government spending and in state and local government spending, and a smaller decrease in residential fixed investment that were partly offset by a much smaller decrease in imports and a downturn in PCE. ...
Real federal government consumption expenditures and gross investment increased 10.9 percent in the second quarter, in contrast to a decrease of 4.3 percent in the first. National defense increased 13.3 percent, in contrast to a decrease of 5.1 percent. Nondefense increased 6.0 percent, in contrast to a decrease of 2.5 percent. Real state and local government consumption expenditures and gross investment increased 2.4 percent, in contrast to a decrease of 1.5 percent. [emphasis added.]
Obviously this wasn't all, or even mostly, the doing of the stimulus. A lot of this spending happens automatically, when people start qualifying for government programs because they lose their job or their income drops. (And how long before the right seizes on the 18.4 percentage point swing in defense expenditures?) But I'd just make two points. One, this broadly shows the importance of government spending to offset the drop in demand, which a lot of people on the right still don't consider a settled issue. And, two, if nothing else, I'd guess those state and local government spending numbers would have looked pretty different without the stimulus money they received in the second quarter.