U.S. Economy Probably Expanded at Slower Pace in Fourth Quarter
The deepening housing slump brought U.S. growth to a near standstill in the fourth quarter and has now probably tipped the world’s biggest economy into a recession, economists said ahead of a government report today.
Gross domestic product advanced at a 0.6 percent annual rate in the last three months of 2007, matching the weakest pace in five years, according to the median projection of economists surveyed by Bloomberg News. The economy grew at a 4.9 percent pace in last year’s third quarter.
So far this year, consumer spending has stalled, and business investment and commercial construction have joined home building in decline. The Federal Reserve’s interest-rate reductions and the government’s rebate checks won’t influence the economy soon enough to sustain the six-year expansion.
“We’re getting a picture of the economy that looks like what you would expect for a recession,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York.
The Commerce Department is scheduled to release the GDP report at 8:30 a.m. in Washington. The 70 estimates in the Bloomberg News survey ranged from no growth to 1 percent. The figures are the second revision of data first issued in January and will, for the first time, include estimates on corporate profits.
“The consumer is under extreme stress,” AutoNation Inc. Chief Executive Officer Michael Jackson said in a Bloomberg Television interview on March 19. AutoNation is the largest publicly traded U.S. car dealer.
“The weakness coming from consumer and business spending will be ugly,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis.
More and more economists are forecasting a recession. Martin Feldstein, the Harvard economics professor who heads the research group that determines when downturns begin, said this month that a contraction had already begun.
Check out this link graphs on Shiller from Jan. year over year.Looks a lot worse with the visual than just reading the numbers.
I know we’re cutting back on our discretionary spending. Most people at my job are cutting back to the price of gas, utilities, and food increases.
I have a menu from last year for my local Chinese restaurant. The lunch specials are up about 8% YOY. The pizza place next door has signs in the window and above the counter saying they have to raise prices to maintain their quality (it is good) due to the rapid increase in prices for their ingredients. I’ve never seen something like that before.
Good thing our gov tells us inflation doesn’t exist or i would be concerned.
bairen have family in pizza business they are getting killed on costs.
I’ve been in 2 places last week (pizza place & bagel place) with signs in the window about price increases
Not to worry the fed has inflation in hand.
Talk about cooking the books.
Good thing they’re cooking them, since they soon may be all we can afford to eat.