Consumer spending and import increases put the brakes on GDP decline

Small businesses may start to experience a glimmer of financial relief, as the latest results from the Bureau of Economic Analysis indicate that the economy is showing signs of turning around.

According to final estimates, the country's real gross domestic product (GDP) posted a decline of 5.5 percent in the first quarter of 2009 - a smaller decrease than both the 6.3 percent experienced in the fourth quarter of 2009 and the 5.7 percent decrease projected by preliminary estimates.

The decrease was negatively influenced by a steep decline in nonresidential fixed investments, as well as declines in residential fixed investments, inventory investments, exports, and government spending. The substantial increase in imports, as well as the moderate increase in consumer spending, helped pick up the reading.

Despite the adverse effect of increased personal spending - which rose 1.1 percent from the fourth quarter of 2009 - companies found themselves with significantly more working capital.

The analysis found corporate profits to have increased 3.8 percent to $48.1 billion - a stark comparison to the 16.5 percent decrease in the previous quarter.

Nonfinancial industry profits in particular increased 0.2 percent, with the substantial increase in utilities and retail trade counterbalancing the decreases in manufacturing and wholesale trade.

This slight economic upswing has already been felt in the small business community - a recent survey by human resources outsourcing firm TriNet found that 60 percent of small business owners are increasing their hiring, marking a 5 percent increase from the previous quarter.