The Commerce Department revised their estimate’s on GDP numbers for the first quarter in a report released today.   

The 0.9 percent gain at an annual pace in gross domestic product compares with an advance estimate of 0.6 percent, the Commerce Department said today in Washington. Fourth-quarter growth was 0.6 percent. Separate figures today showed the number of Americans continuing to receive jobless benefits rose to a four-year high this month.

Investors took that as a positive sign that the economy is remaining resilient despite the ongoing problems in the housing and credit markets.  Many economists have been predicting a recession for the U.S. economy and while growth has slowed considerably, it still remains in positive territory.

The unexpected rise in GDP has been attributed to the rapid growth of U.S. exports which is benefiting quite nicely from the decline of the dollar.  While the U.S. is still running a trade deficit, it’s has fallen to lowest level in six years.

Americans have also cut back on their consumption of imports, the prices of which have risen sharply over the past year.  While domestic purchases have increased, consumer spending has slowed which has dragged down economic growth.

If unemployment figures can remain stable for the upcoming quarters it may be possible for the economy to stay out of a recession.

The Commerce Department revised their estimate’s on GDP numbers for the first quarter in a report released today.   

The 0.9 percent gain at an annual pace in gross domestic product compares with an advance estimate of 0.6 percent, the Commerce Department said today in Washington. Fourth-quarter growth was 0.6 percent. Separate figures today showed the number of Americans continuing to receive jobless benefits rose to a four-year high this month.

Investors took that as a positive sign that the economy is remaining resilient despite the ongoing problems in the housing and credit markets.  Many economists have been predicting a recession for the U.S. economy and while growth has slowed considerably, it still remains in positive territory.

The unexpected rise in GDP has been attributed to the rapid growth of U.S. exports which is benefiting quite nicely from the decline of the dollar.  While the U.S. is still running a trade deficit, it’s has fallen to lowest level in six years.

Americans have also cut back on their consumption of imports, the prices of which have risen sharply over the past year.  While domestic purchases have increased, consumer spending has slowed which has dragged down economic growth.

If unemployment figures can remain stable for the upcoming quarters it may be possible for the economy to stay out of a recession.

While financial executives put a positive spin a month ago that the financial crisis was getting better due to the actions taken by the Fed, the fact remains that there is still no end in sight to the credit crunch gripping the U.S. banking system.  If the housing market doesn’t start to improve soon, the economy could be gripped in stagnant growth for years.

As long as home prices remain deflated, banks will be at risk from defaults and foreclosures.  This article in MarketWatch explains how the Federal Depository Insurance Corporation(FDIC) is preparing for a surge in bank failures in the next couple of years.

While loan growth soared in 2004 and 2005, most regulators failed to scrutinize many banks or restrain this heady expansion of credit. Now that the loans have been made and delinquencies are climbing, some banks may already be doomed.

At least 150 banks will fail in the U.S. during the next two to three years, according to a projection by Gerard Cassidy and his colleagues at RBC Capital Markets.

That’s a staggering number of lending institutions and brings back the bitter memories of the Savings & Loan era.  All these banks that mismanaged their risk perhaps deserve to fail but the economic fallout could be considerable.

I don’t see the Fed being able to do for all these prospective bank failures what they were able to do for Bear Stearns.  The most likely occurrence is that taxpayers will once again take it on the chin like they did for the S&L debacle.