GDP Contraction in Q4 Revised Sharply to 6.2 percent

The U.S. Commerce Department said today that the economy in the fourth quarter of 2008 fared much worse than initially reported, contracting at an annual rate of 6.2 percent rather than the 3.8 percent contraction reported in January.

The revision makes the fourth quarter of 2008 the worst quarter for gross domestic product performance since the first quarter of 1982, when the economy contracted at a 6.4 percent rate.

Economists had been expecting a downward revision to the GDP figure, but most anticipated Q4 contraction of around 5.5 percent.

Consumer spending fell at a 4.3 percent pace in the quarter, the worst since 1980.

Spending on durable goods plunged 22.1 percent, the worst since 1987, while spending on nondurable goods fell a record 9.2 percent.

Analysts are expecting GDP growth in the first quarter to be around negative 4.8 percent. Since 1947, GDP has never contracted by more than 4 percent in two consecutive quarters.