For those who wished for an economic recovery to the recession that started in 2007 to end last year, the end of the fourth quarter for 2008 was not what they had in mind. It is official that the last quarter of last year will go on record as the most catastrophic quarter for the U.S. economy since the 1930’s. No greater losses in gross domestic output, income, wealth, profits, foreclosures and jobs have been recorded in America since the time period following the Great Depression.
Fourth Quarter 2008
The last quarter of 2008’s statistics were negatively impacted by the “perfect storm” of turmoil. Consumer spending (accounting for 70% of the economy) combined with decreases in exports, residential and business expenses are all to blame for the devastation that concluded the end of last year. In general, households lost $5.1 trillion in wealth during 2008’s grand finale. It is important to consider that the economy is significantly larger than during the 1930s. Massive economic contractions have also led to an increased savings rate for Americans.
Entire Country Affected
Gus Faucher, director of macroeconomics at Moody’s Economy.com, said that “It’s really unprecedented in the U.S. to have nearly the entire country in a recession simultaneously.” The depth and breadth of the current economic tide is impacting not only every area in the country, but nearly all sectors of the economy as well, except for the Federal government.
However, it is important to note that 2008 behind us, and the future is not all doom and gloom. It was reported on March 24, that the end to the recession is expected by some by year end. There are some positive signs, such as a recent stock market rally and the increase of new home sales in February.
How do you think this quarter will compare to the last?