AN ECONOMIC ‘TRAIN WRECK’…. We knew the numbers would be bad, and they are.
The United States economy shrank at its fastest pace in 26 years from October through December, the government reported on Friday, in the broadest accounting yet of the toll of the credit crisis. Consumer spending and business investment all but disappeared, and economists said the painful contraction was likely to continue at an alarming pace well into the summer.
The gross domestic product — a crucial measure of economic performance — shrank at an annual rate of 3.8 percent in the fourth quarter of 2008 as the credit crisis deepened the recession. The contraction was significantly better than many economists had expected, but raised the possibility that the economy had not yet hit bottom.
“It was basically a train wreck for the economy in the fourth quarter,” said Alan D. Levenson, chief economist at T. Rowe Price.
There were some expectations that the economic contraction would be even worse — some were predicting a 5.5% drop — but that’s cold comfort. Jobs were cut, business investments were curtailed, trade fell, demand fell, and consumers spent less. And there’s no evidence this is the bottom.
In light of all of this, maybe policy makers in Washington can, at their earliest convenience, invest in some kind of large stimulus package.