Below is a statement from Christina D. Romer, Chair, Council of Economic Advisors on the Fourth Quarter 2008 Advance GDP Estimate:
Real GDP fell at an annual rate of 3.8% in the fourth quarter of 2008. This was the largest one-quarter fall since 1982 and the second consecutive quarter of real GDP decline. A substantial increase in real inventory investment (from a large negative number in 2008Q3 to a small positive number in 2008Q4) mitigated the overall decline somewhat. Real final sales, GDP less the change in private inventories, declined at an annual rate of 5.1%. The large decline confirms the evidence from other indicators, such as payroll employment and the unemployment rate, that the U.S. economy continues to contract severely. Aggressive, well-designed fiscal stimulus is critical to reversing this severe decline and putting the economy on the road to recovery and improved long-run growth.
The decline in GDP was spread throughout the economy. Personal consumption expenditures declined at an annual rate of 3.5%, which was similar to the fall in the third quarter of 2008; these falls were the largest since 1980. Nonresidential fixed investment fell 19.1% and exports fell 19.7%. The decline in motor vehicle output was particularly severe, accounting for 2.0 percentage points of the overall fall in GDP of 3.8%. This widespread decline emphasizes that the problems that began in our housing and financial sector have spread to nearly all areas of the economy. Immediate action to support both the financial sector and overall demand is essential.
— Steve Clemons