Steep Slide in U.S. Economy, but Not as Dire as Forecast

Source: NY Times

The United States economy shrank at its fastest pace in a quarter century from October through December, the government reported on Friday, in the broadest accounting yet of the toll of the credit crisis. Consumer spending and business investment all but disappeared, and economists said the contraction was likely to continue at an alarming pace well into the summer.

The gross domestic product — a crucial measure of economic performance — shrank at an annual rate of 3.8 percent in the fourth quarter of 2008. The decline would have been much steeper — more than 5 percent — if shipments of goods had fallen as sharply as orders.

“The difference between 3.8 and 5.1 percent is the inventory buildup,” Nigel Gault, chief United States economist at IHS Global Insight, said. “My only explanation is that companies could not cut production fast enough.”

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Christina D. Romer, chairwoman of President Obama’s Council of Economic Advisers, said the report offered more evidence that the economy continued to contract severely, and said “immediate action” was needed to shore up the financial sector and broader demand. “Aggressive, well-designed fiscal stimulus is critical to reversing this severe decline and putting the economy on the road to recovery and improved long-run growth,” Ms. Romer said Friday in a statement.

Read more: http://www.nytimes.com/2009/01/31/business/economy/31econ.html?hp

more BLS BS! wait till they revise them -- dowm!

A big reason the economy is failing is because of confidence. Defeatist attitudes are not helpful.

the reason the market is correcting now is because of 30 years of "confidence" a.k.a. wishful thinking.

The correction now is a return to REAL value in the market, rather than inflated numbers.

many saw this coming but were literally laughed at for their analysis buy their ( bubble economist ) peers... these results were inevitable.... " now i understand, what you tried to say to me.... how you suffered for your sanity, how you tried to set them free.... they were`nt listening then, their not listening still....... perhaps they never will." Simon and Garfunkel -- Vincent.

By June, we'll be eating dirt in the street.
But by third quarter, we will all be covered in pixiedust in cloudcoocooland.