GDP Accurately Reports Economy with a .3% Drop

With the U.S. economy shrinking at a rate not seen since 2001, most everyone has acknowledged that we are in for a long recession and it won’t be good.  Many on Wall Street predicted more a more drastic decline so the market rose during the day. I predict that they will get their wish when the report comes for the 4th Quarter of 2008. With numbers ranging from 1-5 percentage drop, my estimate is 4%. Keep in mind that the GDP rose 2.8% in the 2nd quarter so dropping to a negative number just one quarter later is significant.

If the GDP numbers were not bad enough, there is more bad news that we received in the Commerce Department report:

3.1% Decline in Consumer Spending (Biggest drop since 1980)

6.1% Unemployment Nationwide (trending to over 9% for 2009)

6.4% Decline in Spending on Clothing and Food (biggest drop since 1950)

It looks like we will have one hell of a hole to climb out of in 2009 and beyond. Don’t be discouraged at the prospect of overcoming this near impossible task. Americans have that, “Never Give Up” attitude and I expect a complete reversal of fortune in the 1st quarter of 2011.

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