U.S. Economy Slides 6.1% In Obama's 1st 100 Days.

Figures released early Wednesday showed the U.S. economy shrank at an annualized rate of 6.1% during the first hundred days of Obama's Presidency.These figures were worse than expected. Experts had predicted a decline of about 5%.

To be fair to Obama he has not been able to set any economic agenda.He inherited an economic meltdown and has been simply trying to get the economy back on track.So far, all he can be credited with is the passage of a $787 billion stimulus plan.The stimulus plan has also not led to any significant increase in government spending so far.Government spending has actually declined by almost 4% in this period. Both home prices and home sales continue to fall, and unemployment continues to rise.

Many see the first glimmers of hope . Consumer sentiment has shown a marginal improvement and consumer spending is showing signs of stabilising.The benefits of increased government spending and tax cuts are also expected to kick in from the month of May, and Wall Street is back to where it was when Obama took office.Nevertheless the fact is that the economy continues to be as bad as it was in the last quarter of last year when it contracted at an annual rate of 6.3%.

Many experts caution against being overly optimistic about the near future.They say that the current optimism stems from the fact that companies have announced quarterly results that are not as bad as expected.But this does not take away from the fact that both sales and profits continue to fall, it is just that the rate of fall is slightly slower.They emphasise that the jobless rate is at 8.5% and will in all likelihood hit 10% by the end of the year.U.S. exports have fallen 30% and are unlikely to revive any time soon. Spending on home building as well as fresh business investment are all down sharply.A 2.2% increase in consumer spending can best be described as a blip.This is because increasing unemployment, declining wealth and tougher lending conditions will continue to exert a downward pressure on consumer spending and thereby on manufacturing.High unemployment will also raise default levels on both consumer and corporate loans which will further affect the health of the financial system

Clearly the economic crisis is still to find its trough. There is more pain to come.Recovery is bound to be a slow and lengthy process.