The US economy may still have contracted sharply in the first quarter, but sunnier skies are on the horizon, economists say.  

On Thursday, gross domestic product for the first three months of 2009 was revised to an annual rate of -5.5%, a slight improvement from the Commerce Department's earlier reported -5.7%. While the revision did little to move the markets, economists think the worst is behind us.

“I think the freefall is over,” said Gus Faucher, the director of macroeconomics for Moody’s Economy.com. “The economy is still in contraction but is improving.”

Faucher expects to see another negative number in the second quarter, with the economy shrinking by two to three percent before the country's anemic economy moves “very slightly positive” in the third quarter.

Even the most bearish economists say GDP is likely to improve, thanks to the bump in government spending that will likely stimulate growth throughout the end of 2009.

“We certainly are going to see positive growth in the third and fourth quarter, but only because of government stimulus,” said Lindsey Piegza, an economic analyst at FTN Financial.

Piegza predicts GDP to tick up in the third and fourth quarter, but worries about a possible return to negative growth once the impact of the stimulus wears off.

“Will we see positive growth? Yes—we bought and paid for that already,” Piegza said. “But the question is, once the stimulus money runs out will we see organic growth take hold, or will we see a return to negative.”

Stuart Hoffman, chief economist for PNC Financial Services, agrees that we will soon see the economy improve, but conceded that recovery is likely to be characterized by a long period of gradual growth through 2010.

“There’s always a quarter where there’s a little pop, but the trend defining the year of 2010, would be two-and-a-half to three percent growth for GDP in 2010, which is respectable but not after 2 years of decline,” Hoffman said.

Hoffman went onto explain that experiencing just three percent growth in the first year of an economic recovery period would, in historical terms, be one of the slowest recoveries on record, from one of the deepest recessions on record.

Ultimately, the pace of recovery hinges on the success or failure of the government’s stimulus plan, Piegza said.

“Right now we’ve been relying entirely on the public sector to stimulate growth…to provide artificial means in order to prop up the economy, but the government cannot and will not be able to support the economy going forward,” Piegza said. “If we don’t see the stimulus act create jobs, create businesses and create incentives for corporations to grow, we won’t have much to stand on turning the corner into 2010.”