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US economy shrinks faster
By Timothy Homan |
February 28, 2009, Saturday
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Print Edition
Print Edition
THE United States economy shrank in the fourth quarter at an even faster pace than previously estimated.
Gross domestic product contracted at a 6.2-percent annual pace from October through December, more than economists anticipated and the most since 1982, according to the Commerce Department in Washington. Consumer spending, which comprises about 70 percent of the economy, declined at its fastest pace in almost three decades.
The recession is forecast to persist at least through the first half of this year as job losses mount and purchases plummet.
"The economy really hit the brakes very hard in the fourth quarter," John Herrmann, president of Herrmann Forecasting LLC in Summit, New Jersey, said. "We're in a pretty severe, protracted recession. The economy could continue to struggle into 2010."
Treasuries rose, driving down yields. The benchmark 10-year notes yielded 2.93 percent as of 8:40am in New York, down 6 basis points from the previous day. Stock-index futures extended earlier losses, with futures on the Standard & Poor's 500 Index dropping 2.3 percent.
GDP was projected to contract at a 5.4-percent annual pace last quarter, according to the median estimate of 74 economists surveyed by Bloomberg News.
Consumer spending dropped at a 4.3-percent annual rate last quarter, the most since 1980, after falling at a 3.8 percent pace the previous three months. That marks the first time purchases have dropped by more than 3 percent in consecutive quarters since record-keeping began in 1947.
Companies cut 598,000 workers in January, bringing total cuts to almost 3.6 million since the end of 2007.
Gross domestic product contracted at a 6.2-percent annual pace from October through December, more than economists anticipated and the most since 1982, according to the Commerce Department in Washington. Consumer spending, which comprises about 70 percent of the economy, declined at its fastest pace in almost three decades.
The recession is forecast to persist at least through the first half of this year as job losses mount and purchases plummet.
"The economy really hit the brakes very hard in the fourth quarter," John Herrmann, president of Herrmann Forecasting LLC in Summit, New Jersey, said. "We're in a pretty severe, protracted recession. The economy could continue to struggle into 2010."
Treasuries rose, driving down yields. The benchmark 10-year notes yielded 2.93 percent as of 8:40am in New York, down 6 basis points from the previous day. Stock-index futures extended earlier losses, with futures on the Standard & Poor's 500 Index dropping 2.3 percent.
GDP was projected to contract at a 5.4-percent annual pace last quarter, according to the median estimate of 74 economists surveyed by Bloomberg News.
Consumer spending dropped at a 4.3-percent annual rate last quarter, the most since 1980, after falling at a 3.8 percent pace the previous three months. That marks the first time purchases have dropped by more than 3 percent in consecutive quarters since record-keeping began in 1947.
Companies cut 598,000 workers in January, bringing total cuts to almost 3.6 million since the end of 2007.
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