GDP for 4th Quarter 2008

The Bureau of Economic Analysis has updated their advanced estimate of GDP growth in the fourth quarter of 2008 and it is not good at all.

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 6.2 percent in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent.

The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the decrease in real GDP was 3.8 percent (see “Revisions” on page 3).

The decrease in real GDP in the fourth quarter primarily reflected negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partly offset by a positive contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

This is decidedly worse economic performance and as such it is likely that this recession could very well be the worst on record since WWII. I still don’t think it is Great Depression style bad, but it is indeed very bad.

UPDATE (Dave Schuler)

To put this decline in some perspective I think we need to recognize that a) ours is not the only economy that’s declining; b) our decline isn’t as bad as many; and c) last year’s decline was nothing like the Great Depression.

Country Percent
Japan 12.7%
United Kingdom 1.8%
Germany 8.0%
U. S. (1932) 13%
FILED UNDER: Economics and Business, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Triumph says:

    This is decidedly worse economic performance and as such it is likely that this recession could very well be the worst on record since WWII. I still don’t think it is Great Depression style bad, but it is indeed very bad.

    It is no coincidence that the worst part of the recession started once Obama got elected. All business owners and corporate types knew that McCain would be able to solve the problem.

    Once B. Hussein, the spendy-spend liberal got in, all economic confidence eroded. This guy has a lot to answer for.

  2. Pete Burgess says:

    Steve, take a look at this site, especially the Gold Volatility model. I have the paper if you want to read more about it. It seems to be a very reliable indicator of PCE out 6 months. Look where PCE is going to be in June.

    http://www.supplysideforum.com/

  3. hsr0601 says:

    I think the choice from success/democracy/peace/energy independence/science and failure/invasion/war/energy overreliance/ignorance is up to Americans. As seen in the incurable loss of oil-based car makers concentrating on lobbying and the low demand for oil, the time has changed asking for action, please get real. The world market has not responded to the position on the fence in the U.S. lately. In a sense, taking the war spending into account, oil can be cited as the most expensive resource. At this moment, the most fearful threat may be not the rift surrounding oil, but the worsening world-wide recession and poverty, then the extra forces to Afghanistan and extending period of stay,excessive remaining forces in Iraq need to be retracted to forgo the wasteful, unproductive spending, and it will be the mere pathway to recovery as the global market is intertwined. Thanks.

  4. spencer says:

    In 1929 real GDP growth was 3 % as compared to 1.1% in 2008.

  5. tom p says:

    To put this decline in some perspective I think we need to recognize that a) ours is not the only economy that’s declining; b) our decline isn’t as bad as many; and c) last year’s decline was nothing like the Great Depression.

    I couldn’t help but notice Dave, that you picked 1932, so I looked it up:

    In ’30 the GDP was -8.6%, ’31 it was -6.4%, in ’32 it was the -13% you cite.

    Just trying to give a clearer picture. The tale may not be told for another year.

  6. tom p says:

    and as Dr. Perry says:

    “The chart above displays annual real GDP growth from 1928-1945 (data here), showing the -29.3% cumulative drop in real GDP between 1930 and 1933 during the Great Depression. That would be like today’s real GDP going from the current level of $14.5 trillion back to the level of real output in 1996. And that seems highly unlikely.”

    Tho I wonder how he feels about it now. (he has not yet posted on the latest GDP #s.

  7. steve s says:

    But…but…I thought the fundamentals of our economy were strong…we’re just in a mental recession…Obama was just ‘fear-mongering’ how bad things were…

  8. Steve Verdon says:

    steve s,

    When have I ever said the fundamentals were strong or that we are in a mental recession? I do thing Obama engaged in fear mongering to get his desired policies passed, but that speaks of the weakness of said policy when you can’t sell it on the merits but by scaring people.

  9. tom p says:

    I do thin(k) Obama engaged in fear mongering to get his desired policies passed, but that speaks of the weakness of said policy when you can’t sell it on the merits but by scaring people.

    Steve V, that is called “Politiics”…. I know you hate that word, but there it is.