US economy shrinks 6.2% in Q4

Saturday, February 28, 2009 at 5:02 am

The US economy shrank by a staggering 6.2% in the December quarter, the most in any quarter during the past 26 years as consumers crimped spending and exports plunged. “Real gross domestic product — the output of goods and services produced by labor and property located in the US — decreased at an annual rate of 6.2% in the fourth quarter of 2008,” according to the revised figures from the Bureau of Economic Analysis.

The initial estimate had pegged the GDP to fall 3.8 per cent in the fourth quarter. The latest figures are the highest economic contraction reported since the GDP decline of 6.4 per cent in the first quarter of 1982. “Most of the major components contributed to the much larger decrease in real GDP in the fourth quarter than in the third. The largest contributors were a downturn in exports and a much larger decrease in equipment and software,” the BEA which is part of the US Department of Commerce said in the statement.

For the full year 2008, the country’s real GDP rose 1.1 per cent as against two per cent in the previous year. The statement pointed out that the slowdown in GDP was mainly due to a sharp decline in personal consumption expenditures, downturn in equipment and software, and decelerations in exports, among others.

US, the world’s largest economy, had officially entered into recession in December 2007. The economic situation turned worse in the fourth quarter of last year, forcing the Federal government to come to rescue of many financial institutions and also unveil a mammoth $800-billion bailout package. The ongoing financial turmoil became intense after the collapse of Lehman Brothers in September 2008 and resulted in losses of thousands of jobs.

(With inputs from agencies)

( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)

US economy shrinks 6.2% in Q4

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