GDP For Fourth Quarter Revised Lower

Washington, DC, Feb. 27, 2009--The U.S. gross domestic product fell in the fourth quarter at the fastest pace since 1982 on sharp declines in consumer spending, investment and exports, the government said Friday.

GDP fell at a 6.2% seasonally adjusted annualized pace in the final three months of 2008, revised from the initial estimate of a 3.8% drop, the Commerce Department reported. It was the worst decline in GDP since a 6.4% decrease in the first quarter of 1982.

Economists had expected a revision to a 5.5% decline, based on updated monthly data on inventories, exports and other key measures.

The revision showed inventory investment and exports "substantially weaker" than first reported, the government said. Consumer spending was also revised lower.

Federal Reserve Chairman Ben Bernanke said earlier in the week that he was confident the economy would rebound modestly later this year and into 2010, but only if the government's efforts to stabilize the banking system prove successful.

Consumer spending fell at a 4.3% pace, the worst since 1980, and subtracted 3 percentage points from growth in the quarter.

Spending on durable goods plunged 22.1%, the worst since 1987, while spending on nondurable goods fell a record 9.2%. Spending on services rose, up 1.4%.

Residential investment fell 22.2%, the 12th consecutive decline in the sector where all the trouble began. Housing investments subtracted 0.8 of a percentage point from growth.

Export growth had kept GDP positive during the first two quarters of the recession early last year, but global growth has now collapsed, kicking away the main source of support for the U.S. economy and its workers.

Exports fell 23.6% in the fourth quarter, the most since 1971, reflecting the global recession that is hitting Europe, Japan and other trading partners even harder than the United States.