Real GDP contracted at a 3.8% annualized rate in the fourth quarter of 2008, much better than the consensus expectation for a 5.4% decline. Still, this was the biggest contraction in the economy since the first quarter of 1982. Consumer spending, business investment, and investment in housing all declined in the fourth quarter as the U.S. remains in the midst of the worst recession since the Great Depression.
One of the few bright spots we clung to in 2008, growth in trade has faded as real global GDP growth is slowing after six years of expansion. The developed world has now fallen into a synchronized recession.
Consensus forecasts agree that GDP will continue to fall hard and remain weak through the second half of 2009. Every major leading indicator on a monthly basis continues to point straight down with many analysts unsure whether or not the market has reached the bottom. There truly can be no recovery until these trends flatted or reverse. Unemployment continues to rise from its low of 4.4% in April to over 6.5% at the end of 2008. Housing starts and building permits remain at record lows while new home sales are down 35% y/y with 11.5 months available despite a 25% inventory decline. The Big 3 appear to be doomed to radical restructuring with or without federal help and the industrial manufacturing sector continues to drop off.
Read more...
Most Popular
Please wait...
RSS
