According to the Friday report of the Bureau of Economic Analysis, the GDP – Gross Domestic Product – marked a steep decline at a 3.8 percent annualized rate in last year’s fourth quarter. 

The figures indicate the second successive fall in GDP – which is the value of all goods and services produced in the economy - after the third quarter 0.5 percent drop. And, two consecutive drops in a country’s GDP are supposed to be an indication of recession; though, even without the figures, the gloom in the economy is pretty evident! 

In addition, the fourth-quarter 3.8 percent drop in GDP is definitely the most precipitous decline after the 6.4 percent fall in the year 1982 – a sign that the ongoing recession is much worse than the 1990-91 and 2001 downturns.

Prior to the Bureau’s announcement of the figures, economists estimated that fourth-quarter GDP to be down by at least 5 percent. However, unexpected growth in inventories resulted in better figures. 

Chief economist at Chicago’s Mesirow Financial, Diane Swonk and other economists who evaluated the underlying data noted that nearly 1.3% of the economy’s output went into inventory – which illustrates that production by the companies surpassed purchase by customers.

Swonk, commenting on the data, said: “Unfortunately, this is a head fake. This is still an economy that is deteriorating rapidly. That has not changed.”