by Frank James
The economy appears to be even sicker than many people thought.
The gross domestic product fell at a 6.2 percent annual rate in last year's fourth quarter, with declining U.S. exports and consumer spending driving the economy's performance ever downward, according to the Commerce Department.
It's the worst contraction of the economy since 1982's first quarter, the Reagan years, when the economy shrank at a 6.4 percent rate.
Today's report should give the Obama Administration and the congressional Democrats who pushed for the $787 billion economic stimulus package that just became law even more ammunition. On the other hand, it likely makes the argument advanced by many Republicans that it contained too much spending a tougher sell.
One reason for that is contained in the report:
"The decrease in real GDP in the fourth quarter primarily reflected negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partly offset by a positive contribution from federal government spending."
So without the federal government's spending, the economy would have shrunk more, perhaps exceeding the 1982 mark. Either way, it's a very ugly report.
Here's an excerpt from the Commerce Department's report:
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 6.2 percent in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent.
The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the decrease in real GDP was 3.8 percent (see "Revisions" on page 3).The decrease in real GDP in the fourth quarter primarily reflected negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partly offset by a positive contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Most of the major components contributed to the much larger decrease in real GDP in the fourth quarter than in the third. The largest contributors were a downturn in exports and a much larger decrease in equipment and software. The most notable offset was a much larger decrease in imports.
Final sales of computers subtracted 0.01 percentage point from the fourth-quarter change in real GDP, the same contribution as in the third quarter. Motor vehicle output subtracted 2.04 percentage points from the fourth-quarter change in real GDP after adding 0.16 percentage point to the third-quarter change.
Comments
Are the folks that keep getting these economic indicators wrong - (3.8% to 6.2% is a pretty big miss) the same people that are telling us what to do to fix them?
Lets be honest here...we are all pretty much winging it, aren't we?
Posted by: heartburn | February 27, 2009 11:49 AM
"the worst rate in a quarter century"
Bush and the Republicans last 'scr-w you' to the American people. The final nail in the coffin for the anti-government, radical free-macket, anti-regulation, no taxes ever, tax cuts for the Rich ideology. We've done the experiment, it failed. Oh but wait, this is a faith-based Party. An anti-rational, anti-science Party..
The Worst President, The Worst Political Party, The Worst economic disaster ion 80 years, Heckuva job.
Posted by: thebob.bob | February 27, 2009 12:20 PM
Posted by: thebob.bob | February 27, 2009 12:20 PM
Mr. Sunshine!
You haven't seen anything yet
Posted by: heartburn | February 27, 2009 12:37 PM
Bob,
.
Wait until you see the economy you get from BO. The United States will be called North Cuba
Posted by: Terry | February 27, 2009 2:01 PM
I think the choice from success/democracy/peace/energy independence/science and failure/invasion/war/energy overreliance/ignorance is up to Americans. As seen in the incurable loss of oil-based car makers concentrating on lobbying and the low demand for oil, the time has changed asking for action, please get real. The world market has not responded to the position on the fence in the U.S. lately. In a sense, taking the war spending into account, oil can be cited as the most expensive resource. At this moment, the most fearful threat may be not the rift surrounding oil, but the worsening world-wide recession and poverty, then the extra forces to Afghanistan and extending period of stay,excessive remaining forces in Iraq need to be retracted to forgo the wasteful, unproductive spending, and it will be the mere pathway to recovery as the global market is intertwined. Thanks.
Posted by: hsr0601 | February 27, 2009 3:44 PM
Terri and Prepuke, you knuckledraggers are the first to try and say that a presidents effects are seen in the following term and not his current term, until this post. But, then again, you are both pugs which means that you do not need to make sense, nor do you have to use any logic in your arguments. You guys just get to spew hatred and lies and hope the weak will follow.
Your boy schrub really f-d us up here. I still think there is a lot more bottom left to this market. I look forward to Obama's stimulus plan making an effect in a few months to hopefully combat this mess that you pugs have created. I look forward to the day when our future kids will read all about that party in our history that tried to kill our country and called themselves conservatives.
Posted by: Xcellentform | February 27, 2009 10:19 PM
Horrible Form,
.
You loon flatliners were blaming the March, 2001 recession on President Bush.
.
Anyway, I'm not talking about today's economy; I'm talking about the economy that BO's fiscal policies will bring us.
Posted by: Terry | February 27, 2009 11:13 PM
Tickle-me-terri,
First off, I am not the ones that blame schrub for the 2001 mess. There was a small mess left from Clinton, it was also a typical election dip, and most importantly, 9-11 happened. Economists are still debating if the 2001 thing was even a recession. http://en.wikipedia.org/wiki/Early_2000s_recession
How can BO's economy be any worse than the Bush Depression that we are entering.....you know, the one who's numbers are posting worse than the Great depression by many indicators?
Posted by: Xcellentform | February 28, 2009 9:12 AM
Horrible From,
.
Than you are one of the few loon flatliners that didn't blame President Bush for 2001 recession.
.
According to the National Bureau of Economic Research - they are the official arbitor of recessions, the recession ocurred. 9-11 happened towards the end of the 2001 recession. It was by no means a cause. 9-11 just hampered the growth cycle coming out of the recession. See the list below.
.
http://wwwdev.nber.org/cycles/cyclesmain.html
.
The Bush recession of 2008 was bad. If BO continues down his path of larger gov't spending and taxing of the job producers, then it may become the Bush Recession-Obama Depression.
Posted by: Terry | February 28, 2009 12:23 PM