The fourth-quarter downturn was worse than originally thought:
The economy at the end of last year contracted at a far faster rate than initially estimated, a government report released Friday said.
The decline in the country’s gross domestic product — a measure of a country’s total output of goods and services — in the last quarter of 2008 was the worst since the 1982 recession, and indicates that the recession has been deeper than previously believed.
Output fell 6.2 percent at an annualized rate in the fourth quarter of 2008, revised downward from a previous estimate of a 3.8 percent decline. The drop was even steeper than many economists had feared, and was much lower than the 0.5 percent contraction from the previous quarter.
The main reason for the downward revision does not bode well for the First Quarter of `09, either:
The downward revisions came primarily because of a larger-than-anticipated contraction in inventories of unsold goods. A wider trade gap than previously reported — that is, fewer American goods being purchased abroad — also pushed G.D.P. downward. Lower consumer sales sliced off some of the previously reported economic output, as well.
This tells me that businesses are likely to spend the first quarter of this year doing what they can do reduce output so that inventories don’t climb even further, and that’s not good news at all.
[...] Last month, we learned that the economy shrank by a greater-than-expected 6.2% in the 4th quarter of 2008. [...]