The US economy almost stalled in the final quarter of last year with a growth rate of just 0.6 percent, its worst year since 2002.
The Commerce Department's report on the gross domestic product, released Wednesday, showed an economy that had deteriorated considerably during the October-to-December quarter as worsening problems in the housing market and harder-to-get credit made individuals and businesses more cautious in their spending. Fears of a recession have grown.
For all of 2007, the economy grew by just 2.2 percent, the weakest performance in five years, when the United States was struggling to recover from the 2001 recession. The housing collapse dealt the economy its biggest blow last year. Builders slashed spending on housing projects by 16.9 percent on an annualized basis, the most in 25 years.
The fourth-quarter's performance was much weaker _ half the pace _ than economists were expecting. They were forecasting growth to clock in a 1.2 percent pace.
The 0.6 percent annualized increase in gross domestic product (GDP) marked a big loss of momentum from the third quarter's brisk, 4.9 percent showing. The fourth-quarter pace was the slowest since the first quarter of last year.
The GDP figures come as worries mount that the country is on the verge of a recession or perhaps is already sliding into one.
To help bolster the economy, the Federal Reserve was poised Wednesday to again cut interest rates. An afternoon announcement was expected.
The fragile economic situation has spurred rare cooperation among Democrats, Republicans and the White House to quickly enact legislation to stimulate the economy.
GDP measures the value of all goods and services produced within the United States and is the best barometer of the country's economic health.
Consumers whose spending is critical to the economy's well-being tightened their belts.
In the fourth quarter, consumer spending slowed to a pace of 2 percent, down from a 2.8 percent growth rate in the prior quarter. For all of last year, consumers boosted spending by 2.9 percent, the smallest increase since 2003.
Businesses also watched their spending more closely during the final quarter of last year. Fearing a lessening appetite from their customers, they cut inventories of goods. That shaved 1.25 percentage points from fourth-quarter GDP, the most in a year.
Spending by businesses on equipment and software slowed to a pace of 3.8 percent in the fourth quarter. For the year, such spending was up just 1.4 percent, the worst showing since 2002.
Sales of US goods and services abroad also slowed sharply in the fourth quarter. Exports grew at a 3.9 percent pace, compared with a sizzling 19.1 percent growth rate in the third quarter. That strong export growth was a key reason why the economy performed so well as a whole in the prior quarter. For all of 2007, exports grew by 7.9 percent, the slowest in two years.
The Commerce Department's report on the gross domestic product, released Wednesday, showed an economy that had deteriorated considerably during the October-to-December quarter as worsening problems in the housing market and harder-to-get credit made individuals and businesses more cautious in their spending. Fears of a recession have grown.
For all of 2007, the economy grew by just 2.2 percent, the weakest performance in five years, when the United States was struggling to recover from the 2001 recession. The housing collapse dealt the economy its biggest blow last year. Builders slashed spending on housing projects by 16.9 percent on an annualized basis, the most in 25 years.
The fourth-quarter's performance was much weaker _ half the pace _ than economists were expecting. They were forecasting growth to clock in a 1.2 percent pace.
The 0.6 percent annualized increase in gross domestic product (GDP) marked a big loss of momentum from the third quarter's brisk, 4.9 percent showing. The fourth-quarter pace was the slowest since the first quarter of last year.
The GDP figures come as worries mount that the country is on the verge of a recession or perhaps is already sliding into one.
To help bolster the economy, the Federal Reserve was poised Wednesday to again cut interest rates. An afternoon announcement was expected.
The fragile economic situation has spurred rare cooperation among Democrats, Republicans and the White House to quickly enact legislation to stimulate the economy.
GDP measures the value of all goods and services produced within the United States and is the best barometer of the country's economic health.
Consumers whose spending is critical to the economy's well-being tightened their belts.
In the fourth quarter, consumer spending slowed to a pace of 2 percent, down from a 2.8 percent growth rate in the prior quarter. For all of last year, consumers boosted spending by 2.9 percent, the smallest increase since 2003.
Businesses also watched their spending more closely during the final quarter of last year. Fearing a lessening appetite from their customers, they cut inventories of goods. That shaved 1.25 percentage points from fourth-quarter GDP, the most in a year.
Spending by businesses on equipment and software slowed to a pace of 3.8 percent in the fourth quarter. For the year, such spending was up just 1.4 percent, the worst showing since 2002.
Sales of US goods and services abroad also slowed sharply in the fourth quarter. Exports grew at a 3.9 percent pace, compared with a sizzling 19.1 percent growth rate in the third quarter. That strong export growth was a key reason why the economy performed so well as a whole in the prior quarter. For all of 2007, exports grew by 7.9 percent, the slowest in two years.
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