The US economy continues to stumble. New figures show that in the final three months of last year GDP – that is the total output of goods and services in the country – contracted at its sharpest rate in more than a quarter of a century.
Exports plunged and US consumers cut their spending by the largest amount in more than 28 years. The revised GDP was worse than last month’s original estimate – down 6.2 percent in the quarter from October-December compared with the same period a year earlier. The economy had shrunk 0.5 percent in the previous three months. For all of last year it expanded 1.1 percent, the slowest pace since 2001. Companies are aggressively scaling back production to cope with a downturn in demand. That is resulting in heavy job losses, piling on the misery for households battling with reduced wealth from collapsing housing and share prices. Economists say prospects for the first quarter of this year are equally bleak. The banks, which triggered the recession with their lending practices, continue to need government help. In the latest emergency move, Citigroup is having its capital boosted by taxpayer dollars for the third time in five months. In return the US government will get to own up to 36 percent of the ailing bank’s shares.