Thursday, March 26, 2009

The Economy Shrank Faster Than Thought

The U.S. economy contracted at pace of 6.3% at end of 2008, slightly worse than had been
previously reported. This was the worst showing in a quarter-century, and probably isn't doing much better this quarter.

Other news about the economy was not much better. New claims for unemployment benefits last week rose to a seasonally adjusted 652,000 from the previous week's revised figure of 644,000, the Labor Department said Thursday. The total number of people claiming benefits jumped to 5.56 million, higher than economists' projections of 5.48 million, and a ninth straight record-high. More job losses were announced this week. Shaw Industries Group Inc., the world's largest carpet maker and a subsidiary of Warren Buffett's holding company Berkshire Hathaway Inc., said it would close two plants in Georgia and lay off about 600 workers. Pharmaceutical company Hospira Inc. said it would cut 1,450 jobs, or about 10 percent of its work force, while beleaguered automaker General Motors Corp. said it laid off 160 engineers, the beginning of 3,400 planned cuts among its salaried employees.

The figures indicate the labor market remains weak even as some other economic indicators have come in better than expected. All the negative forces that are occurring in the economy are now feeding each other in a vicious cycle that has only deepened the recession, now in its second year, and really made this a Great Recession.

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