U.S. Economy in Free Fall in Fourth Quarter
January 26th, 2009Via: MarketWatch:
The U.S. economy contracted violently in the fourth quarter, with gross domestic product falling at its fastest pace in more than 25 years, economists said ahead of what promises to be a grim week of economic news.
“Real economic activity fell off a cliff during the fourth quarter, producing a sharp drop in employment, output and spending,” wrote economists at Wachovia.
And the worst part is that it’s not over. Economists expect another huge decline in the first quarter, with a smaller contraction in the second quarter.
GDP is expected to have fallen at a 5.5% annualized rate in the final three months of last year, according to the median forecast of economists surveyed by MarketWatch. That would be the biggest decline since the 6.4% drop in early 1982 and one of the worst quarters in the post-World War II era.
The government will release its first estimate of fourth-quarter GDP on Friday, the culmination of a very busy week on the economic calendar. See Economic Calendar.
Other major releases will include durable-goods orders for December, home sales for December, and consumer confidence surveys for January.
In addition, economists will be watching the weekly jobless claims data for more clues about the health of the labor market. We could see first-time claims breach the 600,000 mark for the first time since the early 1980s.
None of the news in the coming week is expected to be positive.
My apartment is in a downtown business-district in a white working-class ghetto-suburb (it’s one of those crappy kind of apartments above a store), and these businesses are really taking a hit. The cleaners across the street are closing after being in business for 50+ years. The bakery/soup-and-sandwich place next door is cutting its business-hours by 25%. The jewelry store owned by my landlady did absolutely no Xmas business this year for the first time ever. And that’s just the stuff about which I personally know!