Reduction in US economy in Q4 faster than previously estimated

02-Mar-09

The US economy in Q4 is said to have shrunk at a faster pace than previously estimated as companies slash jobs, orders and inventories globally and exports dipped. A 3.8% drop was estimated by the Commerce Department in its advance report issued last month. Estimates of 74 economists surveyed by Bloomberg News ranged from declines of 3.8-6%. The data will be updated again next month as more information becomes available. Other reports are projected to show businesses contracted this month at the fastest pace in 27 years and consumer sentiment fell. Consumer spending, which comprises about 70% of the US economy, dropped at a 3.7% pace last quarter, more than previously estimated. Purchases dropped 3.8% in Q3, marking the first back-to-back decreases in excess of 3% since record-keeping began in 1947. Companies cut 598,000 workers in January, bringing total job cuts to almost 3.6 mln since the recession started in December 2007.