United States Economic Contraction Fastest since 1982
WASHINGTON (Reuters) -- The US economy shrank at its fastest pace in nearly 27 years in the fourth quarter, government data showed on Friday, sinking deeper into a recession that the White House said demands urgent action.
In a report that showed a broad-based contraction across nearly all sectors, the Commerce Department said gross domestic product shrank at a 3.8 percent annual rate, the biggest contraction since the first three months of 1982.
President Barack Obama, who is pushing Congress to approve a package of spending and tax cut measures that could cost close to $ 900 billion, said the report highlighted the need for quick government action.
''It's a continuing disaster for America's working families,'' Obama said of the latest data. ''The recession is deepening and the urgency of our economic crisis growing.''
The decline, however, was not as deep as analysts had expected, thanks to a $ 6.2 billion rise in inventories, a development that suggests businesses might pull back even more sharply in the first quarter, prolonging the year-old recession.
''Because fourth-quarter GDP was supported by a dubious increase in inventories, today's positive data surprise is a significant burden for the upcoming quarters,'' said Harm Bandholz, an economist at UniCredit Markets and Investment Banking in New York.
The sharp drop followed a 0.5 percent decline in the third quarter. These are the first back-to-back quarterly contractions in output since the last quarter of 1990 and the first quarter of 1991.
The data knocked stocks, with the Dow Jones industrial average ending down 1.82 percent at just over the 8,000 point threshold. Government bond prices, which tend to get a lift from any signs of deepening distress in the economy, rose on safehaven bids.
Data out of the euro zone was also dismal, giving the dollar an edge against the euro.
Analysts had expected the economy to shrink at a 5.4 percent annual pace in the fourth quarter. The shift in inventories added 1. …