The U.S. economy shrank at a lower-than-expected rate in the second quarter, indicating that the worst economic crisis since the Great Depression is starting to ease.

Gross domestic product fell one percent, below the 1.5 percent consensus expected by Bloomberg News. As Bloomberg noted, GDP shrunk 6.4 percent in the prior three months, the steepest drop in 27 years. Data was revised to indicate that the downturn was worse than previously thought.
"Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- decreased 2.3 percent in the second quarter, compared with a decrease of 8.6 percent in the first," according to the U.S. Department of Commerce.

Real personal consumption expenditures -- consumer spending -- showed an improvement, gaining 1.2 percent in the second quarter, up from 0.6 percent in the first. Durable goods decreased 7.1 percent, up from 3.9 percent. Nondurable goods decreased 2.5 percent, in contrast to an increase of 1.9 percent.

These figures underscore the growing improvement in corporate earnings. Among the companies reporting better-than-expected results were such laggards at Motorola Inc. (MOT), Dow Chemical Chemical Co. (DOW) and Caterpillar Inc. (CAT).

Dow CEO Andrew Leveris argued, "The United States economy has found bottom but will be slow in recovering as unemployment continues to be a drag on consumer spending."

Meanwhile, many dark clouds loom over the horizon, including the expected rise in unemployment over 10 percent by next year.

Optimism continues to rule the day, however.