WASHINGTON: The US economy shrank at its fastest pace since 1982 in the fourth quarter and corporate profits plunged a record $120.1 billion, pulled down by falling consumer spending and exports, government data showed yesterday.
In another snapshot of the ailing economy, the number of workers collecting state unemployment benefits rose to a record 5.56 million earlier this month, while new claims climbed to 652,000 last week, a separate government report showed.
“I think people realize the economy seemingly fell off the cliff in the fourth quarter and continued in the first quarter this year. The question now is will you see a moderation in bad news?” said Doug Bender, managing director at McQueen, Ball & Associates in Bethlehem, Pennsylvania.
Gross domestic product, which measures the total output of goods and services within US borders, fell at an annual rate of 6.3 percent in the October-December quarter, the steepest decline since the first quarter of 1982, the Commerce Department said.
The government last month estimated the fall in fourth-quarter GDP at 6.2 percent and the modest revisions to the output estimates reflected adjustments to business inventories and investment figures.
The economy expanded 1.1 percent in 2008, the smallest advance since 2001, after growing 2.0 percent in the prior year, the department said.
Private business inventories were revised to show a $25.8 billion decline, previously reported as a $19.9 billion fall, as business responded to the slump in demand by cutting output.
