Latest reports show that America’s GDP (Gross Domestic Product) shrank my 6.2% in the last quarter which was not only worse than government projections but made it the biggest drop since 1982, and separate figures showed further drops in consumer confidence and business activity.

GDP had been predicted to fall by 3.8 in the last quarter and the 2.4% adjustment was close to five times the size of the average adjustment.

Consumer spending dropped by a 4.3% annual rate last quarter which was the worst since 1980 and it fell at a 3.8% pace during the previous three months making it the first time that purchases dropped by more than 3% in successive quarters since record-keeping began in 1947.

The U.S. economy expanded by a meager 1.1% during 2008 helped by exports and government tax rebates during the first six months which offset the huge slump in consumer spending that took place in the following six months.

Companies trimmed their inventories by a $19.9 billion annual rate during the last quarter instead of expanding them by $6.2 billion as had been predicted, and business purchases of new equipment fell by 29% which was the biggest reduction since 1958.

White House Press Secretary Robert Gibbs said, “The GDP figure denotes that the economy continued to deteriorate throughout the quarter and that acceleration got even greater”, and ‘Fed Chairman’ Ben S. Bernanke said earlier this week that, ” the U.S. economy is in a severe contraction” and added that, “the recession may last into 2010 unless policy makers can stabilize the financial system.

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Tags: economy, GDP, gross domestic product, politics, recession, US economy

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