U.S. fourth-quarter GDP drop biggest since 1982
Fri Feb 27, 2009 12:29pm EST Reuters
By Lucia Mutikani
WASHINGTON (Reuters) The U.S. economy suffered its deepest contraction since early 1982 in the fourth quarter, shrinking at a much worse-than-expected 6.2 percent annual rate as exports plunged and consumers slashed spending.
A month ago, the Commerce Department had estimated the economy shrank at a 3.8 percent pace in the October-December quarter. But downward revisions to inventories, exports and spending led it to issue a much weaker figure on Friday.
“It’s just doom all over. There’s nothing good to take away from this report. I think there’s a few more bad quarters to come,” said Boris Schlossberg, director of currency research at GFT Forex in New York.
The grim data shocked Wall Street, which had braced for a downward revision, but not one nearly so deep. The consensus was for a decline of 5.4 percent.
U.S. stocks fell, with the Standard & Poor’s 500 Index hitting a fresh bear market low, weighed down by the data and news the government could take a large common equity share in troubled financial firm Citigroup. Government bond prices rallied.
A separate report showed mounting job losses turned consumers gloomier in February, evidence the U.S. recession continues to deepen. The final Reuters/University of Michigan consumer sentiment index fell to 56.3 from January’s 61.2.