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US falls by faster pace at end 2008

THE United States economy shrank at a 6.3-percent pace at the end of last year, the worst showing in 25 years, and likely isn't doing better now.

The Commerce Department yesterday reported the economy was sinking a bit faster than the 6.2-percent annualized drop for the October-December quarter estimated a month ago.

Consumers are cutting back under the weight of rising unemployment, falling home values and shrinking investment portfolios. Those factors have forced firms to slash output and jobs. All the negative forces are feeding on each other in a vicious cycle that has deepened the recession, now in its second year.

Economists were bracing for an even sharper 6.5-percent annualized fall in the government's third and final estimate of gross domestic product for the fourth quarter.

The main culprit behind the GDP downgrade was that businesses cut inventories more deeply.


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