Preliminary 4Q GDP Shows a 6.2% Decline

WASHINGTON — The fourth-quarter 2008 real gross domestic product revision was to a 6.2% decline — pretty much as expected, but a far reach from the 3.8% drop printed in the prior estimate and a much sharper than normal change from the usual 0.5 point “miss.” The sharp change reflects new data and alterations to seasonal adjustments for key components.

Perhaps most telling in the data was the fact that real final sales were revised to a 6.4% slide from a 5.1% decrease.

Inventories and exports were revised lower, as expected. But consumer spending also took a down-leg based on revised gasoline and retail sales data and new consumer price index seasonal adjustments that were used for deflating the GDP accounts.

In addition, third-quarter wages and salaries were revised up $11.7 billion, reflecting a more comprehensive tally of incomes. This did little to bolster fourth-quarter spending.

For the record, the 6.2% drop was the worst showing in growth since a 6.4% decline in the first quarter of 1982.

— Market News International

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