Output fell 6.2 percent at an annualized rate in the fourth quarter of 2008, revised downward from a previous estimate of a 3.8 percent decline. The drop was even steeper than many economists had feared, and was much lower than the 0.5 percent contraction from the previous quarter reports the New York Times.
The announcement comes on the heels of a new budget from the Obama administration that assumes what some economists have called an unrealistically optimistic view of the near-term future of the American economy.
The downward revisions came primarily because of a larger-than-anticipated contraction in inventories of unsold goods. A wider trade gap than previously reported – that is, fewer American goods being purchased abroad – also pushed G.D.P. downward. Lower consumer sales sliced off some of the previously reported economic output, as well.
Friday’s revision, which will be followed by a final number from the Bureau of Economic Analysis next month, usually garners little attention from analysts. But because the contraction was more severe than previously reported, and because the government has been grappling with how to determine how serious the recession is and how to remedy it, many will be citing data as a sign that the economy is on a dismal trajectory.
Futures indexes fell after release of the report, indicating a sharply lower opening on Wall Street.
Government officials and Wall Street analysts expect that the G.D.P. decline bled into 2009, and are anticipating a similar for the first quarter of this year. The 2010 national budget released Thursday by the White House projected 1.2 percent decline in G.D.P. over the course of 2009.