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The US recession in worsening

Discussion in 'International Forum' started by BAK, Jan 30, 2009.

  1. BAK

    BAK JF-Expert Member

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    Jan 30, 2009
    Joined: Feb 11, 2007
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    US economic output falls sharply
    BBC News Online​

    The US recession in worsening

    US economic output fell 3.8% in the last three months of 2008, the worst quarterly contraction in more than 26 years, official figures have shown.

    Much steeper than the 0.5% fall between August and October, it is also the first time the US has seen consecutive quarterly economic declines since 1991.

    The latest sign of the worsening US recession comes as President Obama's stimulus plan passes through Congress.

    More US workers lost their jobs in 2008 than any year since World War II.

    During 2008 as a whole, the US economy grew just 1.3%, down from 2% in 2007, and the slowest growth since 2001, the Commerce Department said.

    Grim reading

    The performance of the US economy between October and December was the worst since the first quarter of 1982.

    This is a much more severe global downturn that had been anticipated

    Scott Brown, Raymond James & Associates

    Although the 3.8% decline was not as bad as the 5.4% drop expected by the markets, analysts said the report still made grim reading.

    Spending on durable goods such as cars, furniture and domestic appliances plunged 22.4% during the quarter, the biggest drop in this figure since 1987.

    The amount spent on food and clothing dropped 7.1%, the steepest quarterly decline since 1950. Overall consumer spending was down 3.5%.

    Overall exports fell by 19.7%.

    Meanwhile, business equipment and software spending was down 27.8%, with spending by homebuilders down by 23.65%.

    Nigel Gault, chief US economist at Global Insight, said the figures "did not look healthy".

    Fellow analyst Scott Brown, chief economist at Raymond James & Associates agreed, saying the details "were pretty terrible".

    "This is a much more severe global downturn that had been anticipated," said Mr Brown.

    Stockpiling orders?

    Other commentators said the decline in fourth quarter GDP would have been much worse, were it not for a big increase in firms stockpiling goods they effectively couldn't sell.

    "The headline GDP figure was better than expected but this is very much an illusion supported by an unexpected increase in business inventories," said Sal Guatieri, senior economist at BMO Capital Markets.

    The data came as heavy equipment firm Caterpillar said it was cutting as extra 2,110 jobs.

    Last month, the National Bureau of Economic Research, the country's business cycle dating committee, said the US entered the current recession in December 2007.

    Global oil prices were up in Friday afternoon trading, lifted by growing signs producers cartel Opec will cut production, and the fact that the US GDP figure was - at least on the face of it - not as bad as expected.

    US light crude was up $1.34 to $42.78 a barrel, while London Brent had added $1.70 to $47.10.

    Stimulus package

    President Barack Obama's $819bn (£572bn) economic stimulus package passed through the House of Representatives on Thursday by a vote of 244 to 188.

    No Republicans backed the plan, saying it was too expensive and would not work.

    The Senate debates the plan next week, and it could face stiff opposition as the Democrats have a slimmer majority in the upper chamber.

    After Thursday's vote, President Obama urged members of Congress not to "drag our feet or allow the same partisan differences to get in our way".

     
  2. Natty Bongoman

    Natty Bongoman JF-Expert Member

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    Jan 30, 2009
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    So scary, ain't it?
    In fact, 'Western' economy is in recession... the news shows Germany's to be the worse, as well as relevant maandamano in various European countries, notably, France and I think UK or Scotland ... one of those

    What scares me mkuu Bubu, is my understanding of 'OUT OF CHAOS, COMES ORDER' ... how worse will chaos get? whose and what kind of order will come out of this?

    I think, China might really emerge as a stronger 'super power' when it all finally passes...
     
  3. Sonara

    Sonara JF-Expert Member

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    Jan 30, 2009
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  4. Exaud J. Makyao

    Exaud J. Makyao JF-Expert Member

    #4
    Jan 30, 2009
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