The U.S. economy contracted at a 3.8% pace in the fourth quarter of 2008, the worst performance since 1982, government data showed on Jan. 30. The decline marked a sharp downward acceleration in economic activity after a 0.5% drop in the third quarter.
But the figure was not as bad as feared, with analysts on average predicting a 5.5% annualized drop in the Commerce Department estimate of gross domestic product (GDP).
Still, analysts took little comfort in the data, which was skewed by a high rate of inventories, suggesting business were surprised by the depth of the downturn and may have to cut production further in 2009.
Sal Guatieri, senior economist at BMO Capital Markets, said that the milder-than-expected fourth-quarter drop could mean an even steeper decline in the first quarter of 2009. "We were running with a forecast of down 4.3% (in the first quarter) but we will likely revise that lower," he said.
Over all of 2008, the US economy grew 1.3%, with total output of goods and services of $14.26 trillion.
Copyright Agence France-Presse, 2009
