Mark Zandi

via Economy Shrinks In 4Q At 3.8 Percent Pace.

WASHINGTON — The economy shrank at a 3.8 percent pace at the end of 2008…

Although the initial result was better than economists expected, the figure is likely to be revised even lower…

“The downturn is intensifying. The fourth quarter is worse than it looks,” said Mark Zandi, chief economist at Moody’s Economy.com.

On Wall Street, stocks dipped. The Dow Jones industrial average slid more than 105 points in midday trading, and broader indexes also fell.

When inventories are stripped out, the economy would have contracted at a 5.1 percent pace in the fourth quarter, closer to the 5.4 percent drop that economists expected. Businesses couldn’t cut production fast enough in response to waning customer demand and got stuck with excess inventories, economists explained.

The Dow Jones industrial average slid more than 105 points in midday trading..

The fourth quarter was by far the weakest three-month period in 2008…

A massive pullback by consumers played a prominent role in the economy’s worsening backslide. They are cutting back on spending as jobs disappear and major investments _ homes, stocks, retirement accounts _ tank in value. Businesses are retrenching, too, as profits shrivel and demand wanes from customers in the U.S. and overseas.

Spending on durables plunged at rate of 22.4 percent, the most since early 1987.

A 7.1 percent annualized cutback in spending on “nondurables,” such as food and clothing was the deepest since the end of 1950.

Big cutbacks by homebuilders _ reeling from the collapsed housing market… Homebuilders slashed spending at a 23.6 percent pace, even deeper than the 16 percent annualized cut in the prior three months.

Spending by businesses on equipment and software dropped at a whopping 27.8 percent annualized pace in the fourth quarter, the most since early 1958.

Exports plunged at a rate of 19.7 percent in the fourth quarter…

The report provided clear evidence of the economy’s rapid deterioration as the housing, credit and financial crises _ the worst since the 1930s…

For all of 2008, the economy grew by just 1.3 percent.

The title of the article should have been Economy STINKS in 4Q At 3.8 Percent Pace. And what are we doing about all this bad news?

To jolt life back into the economy, Obama and Congress are racing to enact a multi billion-dollar package…

That is not entirely true. The Obama and the Democrats are racing to enact a multi-billion dollar package, the Republicans are coming up with every excuse they can think of to obstruct the legislation. Of course their version of  the economic recovery act contains nothing but huge give-aways to the wealthy, in other words, more trickle-down and more deregulation and more of the same failed policies that got us here in the first place.