I know it sounds like an oxymoron, but this number is actually better than expected news.

The estimates were -1.5%. From the BEA:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 1.0 percent in the second quarter of 2009,
(that is, from the first quarter to the second), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 6.4 percent.

Ok, now let's go digging into the details.

Firstly, what is GDP?

GDP = private consumption + gross investment + government spending + (exports − imports), or, GDP = C + I + G + (X − M).

So, why was the drop only -1% instead of the -1.5% expected?

I read a very interesting letter to editor by Professor Eileen Appelbaum today. She argued that we cannot rely on the inventory cycle to lead us to recovery. She argued in the past we may have been able to rely on inventory cycle because increased demand caused by public and private demand would increase output and employment but not this time:

Unfortunately, this time around, things are likely to be very different. The US no longer manufactures most of the goods it needs to replace liquidated inventories, so will need to turn to imports to restock its shelves. Any gains from a rebound in inventories will be largely offset by the negative effects on gross domestic product from an increase in imports.

Japan's Economy Shrinks by 12.7% is reported by Bloomberg.

Japans exports in one quarter dropped 13.9%. Their quarterly GDP was 3.3% contraction and exports accounted for 3% of that drop.

Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, as recessions in the U.S. and Europe triggered a record drop in exports.

The actual numbers from the Commerce Department are not out until January 30th. Yet both Bloomberg and Marketwatch are reporting a 5.5% annual rate drop in GDP for Q4.

Gross domestic product contracted at a 5.5 percent annual rate from October through December, the biggest drop since 1982, according to the median estimate in a Bloomberg News survey ahead of Commerce Department figures due Jan. 30.

Real economic activity fell off a cliff during the fourth quarter, producing a sharp drop in employment, output and spending," wrote economists at Wachovia.
And the worst part is that it's not over. Economists expect another huge decline in the first quarter, with a smaller contraction in the second quarter