The economy shrank at an annual rate of 1 percent in the spring, a better-than-expected showing and more evidence that the recession is drawing to a close.
Many analysts believe the economy is growing in the current quarter, but they caution that any rebound will not be accompanied initially by rising employment.
Jobless claims figures released Thursday were better than expected, but remain well above levels associated with a healthy economy.
The Commerce Department's new estimate for the gross domestic product was unchanged from the initial figure it released last month.
The drop, while representing a record fourth consecutive decline, was far smaller than the previous two quarters. It also was stronger than the 1.5 percent decline that private economists expected.
The report Thursday found that businesses slashed their inventories more than first reported and cut back more sharply on investment in new plants and equipment. But those reductions were offset by revisions that showed smaller dips in consumer spending, exports and housing construction.
The 1 percent rate of decline in the April-June quarter followed decreases of 6.4 percent in the first quarter and 5.4 percent in the final three months of 2008, the sharpest back-to-back declines in a half-century.
The recession that began in December 2007 is the longest since World War II, and the deepest in terms of the drop in the GDP, which is down 3.9 percent from its previous peak.
But economists are heartened that the decline slowed to 1 percent in the spring.
Many analysts think that the government's $787 billion economic stimulus plan and the Cash for Clunkers program to boost car purchases will lift GDP growth to around 2 percent in the current July-September quarter.
However, the return to economic growth will not mean more jobs, at least at first. Economists believe the unemployment rate, currently at 9.4 percent, will keep rising through the spring of next year.
The Labor Department said Thursday that first-time unemployment claims fell to a seasonally-adjusted 570,000, from an upwardly revised 580,000 the previous week.
The tally of those continuing to claim benefits dropped to 6.13 million from 6.25 million, the lowest level since early April.
White House economic adviser Christina Romer said Tuesday the unemployment rate is likely to keep rising and hit 10 percent this year. That could discourage consumer spending and weaken any recovery.
The government found that consumer spending, which accounts for about 70 percent of total economic activity, fell at an annual rate of 1 percent in second quarter, a slight improvement from the 1.2 percent decline reported last month.
Residential construction and exports also were revised to show smaller declines.
Federal Reserve Chairman Ben Bernanke said last week the economy appeared to be "leveling out," and was likely to begin growing again soon. President Barack Obama appointed Bernanke to another 4-year term Tuesday.
The Cash for Clunkers program, which provides consumers rebates of up to $4,500 for turning in old gas-guzzlers for fuel-efficient cars, has helped spur activity in the auto and related industries.
The economy also has been helped by stabilization in the housing sector, as sales of new and existing homes have risen for four straight months.