Agence France-Presse
October 30, 2008
The US economy contracted in the third quarter as panicked consumers slashed spending, data showed Thursday in the first downside leg of what analysts say could be a deep and nasty recession.
In its first reading of gross domestic product (GDP) in the July-September period, the Commerce Department said output of goods and services fell at a 0.3 percent annual pace amid a sharp retrenchment by consumers and businesses.
The drop in gross domestic product (GDP) was the first negative figure since the fourth quarter of 2007.
The decline, not as steep as the 0.5 percent annualized drop expected by private economists, comes amid mounting expectations of a sharp falloff in the US economy amid the worst banking and financial crisis in decades.
Some analysts said the drop could be just the start of a deep and painful recession, which is normally defined as two consecutive quarters of negative growth.
“A heftier decline in real GDP is likely in the fourth quarter, which will confirm that the US economy is in recession,” said Dawn Desjardins, economist at RBC Capital Markets.
The decrease marked a sharp fall from the 2.8 percent growth rate of the second quarter and reflected weaker consumer and business spending and housing activity, offset in part by strong exports and government spending.
With the decline, economic output was estimated at an annualized 14.43 trillion dollars.
“What is noticeable is that the US economy is hanging onto support from exports that will not last in the fourth quarter,” said Avery Shenfeld, economist at CIBC World Markets.
“The rest of the world is slowing and the rising dollar will take some of the shine off exports. The fourth quarter is going to be much worse, with a decline of perhaps as much as two percent.”
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Comments: 3
Great article.
I watched the CSPAN coverage of the investigations into what to do with a Stimulous Package. Some of them were Food Stamps, shoring up Medical and Social Security, funding ongoing projects that have been stopped due to this recession, fixing the infrastructure such as bridges, roads, sewers, water systems, schools. There are $8 Billionpending "shovel-ready" projects. With construction, every $1 Billion spent is 47,000 jobs (I think that was the number.) That would put lots of people back to work fast, putting the money in ongoing projects especially. Food Stamps would put money into the economy quickly and help keeps our grocery stores more economically stable.
More needs to be spent on solar and wind. Also, the government needs to slap the banks up the side of the head and deny money or require return of money if they give one dime in bonuses or dividends to stockholders on those looser banks that caused this mess. And, their stockholders let them get away with it.
Also in that hearing it was stated that the US GDP is $14 trillion a year and the Derivatives fiasco totals about $600 trillion making it 30 years of GDP. It was also suggested to nationalize the Federal Reserve (now privately owned) and make it a Public Central Bank and I totally agree with that.
Summizing from what info I have so far, the Dow will end up 6000 to 7000 and we are in this recession and housing market/foreclosure mess for three years. But, we could come out a much better and more stable country when it is all done - if, if, if care is taken to make that a goal and not just loot.