U.S. economy shrinking
Andrew Clark and Kathryn Hopkinsin
The American economy shrank at its fastest pace since 1982 during the final quarter of
last year amid a worsening slump in activity described as a "disaster" by President
Barack Obama.
The U.S. Commerce Department said gross domestic product, which measures total output of
goods and services, plummeted at an annualised rate of 3.8 per cent in the three months
to December. Consumption of durable goods such as cars and furniture plun ged by 22.8 per
cent. Overall consumer spending dropped 3.5 per cent.
Speaking at the White House as he launched a taskforce on aiding the middle classes,
President Obama described the contraction as a continuing disaster for America's working
families.
The recession is deepening and the urgency of our economic crisis is raw, said Mr.
Obama, who noted that U.S. unemployment claims had reached their highest level on record.
The fall in GDP, which followed a third-quarter drop of 0.5 per cent, was less severe
than economists had expected with many forecasting a contraction of 5.4 per cent. Experts
said the slower decline was due to a rise in stocks on shops' shelves as businesses
struggled to cut output. "The consumption side of the equation is the worst we've seen
since the 1960s and there?s no evidence that things are getting any better,"said Steve
Ricchiuto, chief economist at Mizuho Securities in New York.
