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.