Preliminary 4Q2008 GDP came in today at -6.2%. This is the second reading for the period, following the -3.8% advance reading last month and preceding the final number that will be released March 26. This is the slowest quarterly pace since 1982, back when average unemployment was 9.7% (vs. 7.2% as of December 2008) and Michael Jackson’s Thriller was released—and went on to become the biggest selling album in history.
As of December 23, 2008, -0.5% GDP was the largest quarterly decline since the tail end of the last recession in 2001. Six days after that release, the NBER declared a recession has been in effect since December 2007. They took pains to counter the popular definition of recession as two consecutive quarters of negative GDP growth, saying that they look at many factors in addition to GDP. GDP growth for the previous four quarters have all been revised downward after their initial readings, and final GDP growth figures for the past four quarters (as well as preliminary 4Q2008) and GDP press release highlights are below.
4Q2007: -0.2% (final)
1Q2008: +0.9% (final)
2Q2008: 2.8% (final)
3Q2008: -0.5% (final)
4Q2008: -6.2 (preliminary)
The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the decrease in real GDP was 3.8 percent.
The decrease in real GDP in the fourth quarter primarily reflected negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partly offset by a positive contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Most of the major components contributed to the much larger decrease in real GDP in the fourth quarter than in the third. The largest contributors were a downturn in exports and a much larger decrease in equipment and software. The most notable offset was a much larger decrease in imports.
Final sales of computers subtracted 0.01 percentage point from the fourth-quarter change in real GDP, the same contribution as in the third quarter. Motor vehicle output subtracted 2.04 percentage
points from the fourth-quarter change in real GDP after adding 0.16 percentage point to the third-quarter change.