Friday, 27 February 2009

Dramatic Contraction in U.S. Fourth-Quarter GDP Figures. The Obama Salvage Plan Will Only Be Felt Until End of Year

The U.S. economy, the world's largest, contracted 6.2 percent in the fourth quarter of 2008 -- a worse result than analysts were predicting. The awful results came on the back of a plunge in consumer spending (which contracted 4.3 percent from a 3.5 percent drop in the third quarter), tumbling exports and a sizeable accumulation in business inventories.

Growth was 1.1 percent for the 2008 year. Some numbers were quite bad: with unemplyment spiking towards 7 percent to 8 percent, domestic demand will conitnue to surprise on the downside. Last year, investment purchases of new equipment fell 21 percent; homebuilding plummeted 22 percent only in the fourth quarter.

President Barack Obama's economic stimulus package will only start sparking some recovery by the end of the second quarter or even during the third. Positive growth hopefully will only show by the end of the year, according to analyst reports from banks including Morgan Stanley, Bulltick, Goldman Sachs ...

1 comment:

  1. I don't get the "economic stimulus package," to be honest. It seems to me like trying to re-inflate a balloon that has already burst in order to keep alive an illusion - or illusions - we are afraid to live without. Que vaina. The response by Congress and the administration to this crisis is less than encouraging. The political courage we urgently need in Washington is clearly MIA. It reminds me of the sage words of the late, great Milton Friedman: "The government solution to a problem is usually as bad as the problem." I fear we may have to change that to end: "... is usually worse than the problem."

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