Economy Shrinks At Staggering Rate

[kpete]

Source: Washington Post

Economy Shrinks At Staggering Rate
Challenges Loom Larger Than Feared With Sharpest Contraction Since 1982

By Annys Shin and Neil Irwin
Washington Post Staff Writers
Saturday, February 28, 2009; Page A01

The prospects for an economic recovery by year's end dimmed yesterday, as government data showed that the economy contracted at the end of 2008 by the fastest pace in a quarter-century. The worse-than-expected data fueled doubts about whether the Obama administration had adequately sized up the challenges it faces in trying to pull the country out of recession.

Gross domestic product, a measure of the goods and services produced across the nation, shrank at an annualized rate of 6.2 percent in the last quarter of 2008, according to the Commerce Department, far worse than the initial estimate of 3.8 percent and the 5 percent most analysts were expecting. The downward revision means the economy began the year from an even weaker position than previously thought.

"The economy really doesn't have any momentum going into the first quarter," Wachovia economist John Silvia said. "To the extent the economy may have been weaker, then the impact of the stimulus would be more muted."

The Dow Jones industrial average tumbled 1.7 percent, or 119 points, capping a week in which stocks were battered by concerns that parts of the banking sector would be nationalized. Shares of Citigroup tanked 39 percent, to $1.50 after the government prepared to take a large ownership stake in the firm. Major indexes closed down about 4 percent on the week.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/02/27/AR2009022700884.html?nav=igoogle

[Possumpoint]

1. Something I Said

last September. If Obama won, he would be handed a shit sandwich by the Bush Administration. It was and is my opinion that the economy was and is in such bad condition, it brings into real question on how the Obama Administration would be able to deliver on its campaign promises. Obama will have to spend much of his political capital on fixing the economy. He will be judged, rightly or wrongly, on how well he handles that challenge. The deficit spending he has committed to on that effort stops most others.

Any rise in taxes necessary to fund the promises will have a retarding effect on the economy. The other choices are to reduce spending in the government but we are presently committed to a two front war on terror with no easy way to suddenly stop. For every government agency that you can name as a candidate for reduction you would have its supporters screaming to keep your hands off of it. Obama has entered a positing that is between a rock and a hard place.

If successful, he would probably be given a second term that might allow him the time to fulfill the promises. However, the Republicans are counting on miscues to give them a chance to regain some seats in 2010. That would make his efforts more difficult.

[gratuitous]

2. Actually, whoever won in 2008 was getting a shit sandwich

Bush's miscalculation was that some of the chickens came home to roost just a little too soon, and folks drew that bright line between his and the Republicans' ruinous economic policies and the shit sandwich we're now enjoying while they hadn't quite made their getaway.

The public seems to be ignoring the predictable yammering from the talking chuckleheads and the bleating of the powerless Republicans, and also seems to be willing to give Obama's policies a try. The biggest point I think the administration can make right now is that things are going to continue to get worse for a while, and that the effects of these policy changes won't begin to be seen until the end of 2009 at the very earliest, and more likely in mid to late 2010. While this can be dismissed as mere political pontificating, it has one advantage that the prognostications from the Bush era didn't have: It could very well be true.

[coffeenap]

3. This is why the repugs ran a candiate combo that would lose.

IMHO

[No Elephants]

7. In primary season, the Democratic had an embarrassment of

riches. The Republican side was an embarrassment.

Huckleberry? Rudy "Noun Verb 911" Guiliani? Mittens? McCain?

I'd better stop. I'm getting nauseous all over again.

[awoke_in_2003]

6. The fact that the GOP...

picked McCain, and then Palin for VP, had me thinking that very same thing. They want to pin this all on the dems, and bring their real candidate out in '12. And, with Americans' short memories, it might just work :(

[barb162]

4. I love these constant downward revisions. The models are so screwed up.

Watch them revise the fourth quarter 08 downward again in about another month. How many years in a row have the models been screwed up and they keep revising downward.

[TheWatcher]

10. They are not screwed up.

This is by design.

They create the Crisis, then ride in as your "Saviors", with their "Solutions."

[ConcernedCanuk]

16. I'm not sure if you are totally correct

.
.
.

But ONE thing I think you are spot on about

The present situation IS purely by design

The PNAC gang got their wars

Stole TRILLIONS of taxpayer dollars

and not ONE of them in jail

In China - the gallows would be working overtime

Corporate executives would be scurrying like the rats they are to the farthest corners of the globe

OH

yeah

there are no corners

We recently discovered the world is a globe, not a flat something or other . . .

[Kolesar]

5. Wow. Worst in a quarter century--I was expecting the worst since Roman times

if some one says "staggering".

[No Elephants]

8. A quarter century puts us in 1984. I remember 1984. I knew 1984. And, 2009,. you are no 1984.

[Kolesar]

12. Remember when Quayle used to compare himself to Robert Redford

...because Danny thought he was such a cute Senator. Then Robert Redford threatened to sue him. He had to knock that crap off. :rofl:

[No Elephants]

9. WAPO is so

sleazy.

"The worse-than-expected data fueled doubts about whether the Obama administration had adequately sized up the challenges it faces in trying to pull the country out of recession."

Bush buried everything and used funny accounting on the rest. But, it's Obama's fault that he did not know the extent of the problem.


The media needs to be whipped in the public square until it cuts out that kind of crap. Just a suggestion.

[Kolesar]

11. NYTimes' Paul Krugman said we may need a second stimulus, and a third stimulus

Woe be that the Wapo would actually try to explain the story at length.

Maybe the real story is that in the next act, Obama is going to have to put the screws to the energy industry and the insurance/health care industry and kick some butts.

[yy4me]

13. I think we all know that President Obama found things far worse

once he was privy to the behind the scenes goings-on in Washington. I can imagine the shock and dismay as he hears more and more of the problems we are facing. With all his good intentions, I hope he is able to carry out his plans, to find all the skeletons in every closet.

The repubs knew how bad it was and promoted a candidate sure to lose so they could start to blame the Democrats for all their prior crooked, sleazy, self-serving maneuvers. That has started quickly and I think will get more nasty with the likes of Boehner and others complaining and contradicting everything.

I really hope he keeps up the heat on every possible area where the principals of last 8 years have messed up. I guess that means everything, doesn't it.

We're all suffering, most of the 300 million of us and it has fallen on his shoulders. What a burden to carry.

[DallasNE]

14. Sad To Say But The News Is Even More Grim Than That

The GDP number is propped up by inventory buildup. Plus, the economy did not go over the edge of the cliff until mid-November. While they don't break it out month by month, there is no doubt that each month was worse than the preceeding month. That sets the table for the 1st quarter of 2009. Not pretty, you say? Bingo!

Look at some of the other troubling numbers that suggest that -6.2% will actually look good going forward. Same store sales with several stores are down 11-14%. Auto sales are down 40%. Japanese exports are down 45.7%. While that last number doesn't have a direct impact it is an important yardstick for measuring economic activity because it points out that car and electronic sales are very severely depressed.

People are starting to whisper 10% unemployment and future weekly jobless claims hitting 750,000. Recent history would suggest that even those numbers are optimistic. Now that is grim.

[Skink]

15. Let's hope everyone makes their credit card payments this month.

when people stop charging things it's going to get worse.

[bemildred]

17. Well I just got an obscure notice about rates from my CC company.

I never carry a balance anyway, but I'm thinking of just going to debits to avoid any further bullshit. But that has its drawbacks too.