Updated with market information. WASHINGTON ( TheStreet) -- In a clearer sign that the economic slowdown may be easing, the Commerce Department said that the economy contracted at a slower rate than the past three quarters. Still, the fourth straight decline in Gross Domestic Product marks a first since records have been kept. The Bureau of Economic Analysis reported that GDP, or the total output of goods and services produced in the U.S., dipped by an annual rate of 1% in the spring. The advance estimate bettered most forecasts, as many economists expected a 1.5% slide.
For the first quarter, the bureau revised estimates, saying GDP slipped even steeper to 6.4%. Before, the group had said the economy shrank by only 5.5%. In the fourth quarter and third quarter of 2008, the economy contracted by 5.4% and 2.7%, respectively. The report noted that smaller dips in business spending and exports helped drive the better results this quarter. The Bureau also said that upturns in all levels of government spending helped prop up the economy as well. However, consumer spending, or the lack there of, remains a nagging weight on the economy. The report noted that consumer spending slid 1.2% during the quarter, as compared to a 0.6% upswing during the first quarter. Consumers are likely to keep their wallets tucked in tight as unemployment figures continue to falter. Earlier in the month, the Federal Reserve noted that while the economic contraction is slowing, unemployment will continue to be a problem. Fed officials anticipate the unemployment rate to top 10% this year. Stock markets finished the day on a mixed note after the report, but rallied to their best July in years. . The Dow Jones Industrial Average and S&P 500 gained 0.2% and nearly 0.1%, respectively. The Nasdaq closed down 0.3%. Shares of Alcoa ( AA) finished up 2.6% on the day, while Bank of America ( BAC) gained 5.9% by the closing bell. Chevron ( CVX), which earlier today posted a 71% drop in profit , saw its shares rise 2.6% by closing. Ford ( F), whose sales were helped "dramatically" by the federal government's cash for clunkers program, rose 8.3% today. -- Reported by Sung Moss in New York.