U.S. Economy Suffers Sharp Nosedive
February 27th, 2009Via: BBC:
The US economy shrank by 6.2% in the last three months of 2008, official figures have shown, a far sharper fall than had previously been reported.
Plunging exports and the biggest fall in consumer spending in 28 years dragged the figure down from the 3.8% estimate the government gave earlier.
The decline was much worse than analysts had expected.
In 2008 as a whole, the economy grew by 1.1%, the slowest pace since 2001. The Dow Jones was down 1.6% in early trade.
Recession warning
Consumer spending, which accounts for about two-thirds of domestic economic activity, fell by a rate of 4.3% in the final quarter – the biggest fall since the second quarter of 1980. This was a revision of the earlier figure of 3.5%.
With rising unemployment, sliding home values, increasing numbers of repossessions and the slumping value of investments, observers say many US consumers are hanging on to whatever disposable cash they have.
Meanwhile, exports – which had until recently been supporting the economy – fell at the sharpest rate since 1970 at an annual rate of 23.6%, down from 19.7%.
