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Recession Is Deeper Than Initial Data Indicated

By John S. McClenahen The economic recession in the U.S. is proving to be less shallow than first figures signaled. For the third calendar quarter of this year, the nation's inflation-adjusted GDP contracted at a 1.1% annual rate, seven-tenths of a percentage point faster than the 0.4% annual rate that the U.S. Commerce Department's Bureau of Economic Analysis initially reported. Merrill Lynch & Co., New York, figures that real GDP is contracting at an even faster 1.5% annual rate in this the fourth, and final, quarter of 2001. For Jerry J. Jasinowski, president of the National Assn. of Manufacturers, Washington, the GDP revision strengthens the case for quick passage of pending economic-stimulus legislation. "An economic stimulus package that reduces personal income taxes as well as encourages business investment must be enacted by the end of the year," insists Jasinowski. In the meantime, Merrill Lynch is holding to its prediction that the U.S. will begin to recover from recession during the second quarter of 2002 -- with real GDP possibly growing at a 5% annual rate by the second half of next year.

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