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International News>US slows to a crawl- AP |
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The United States economy skidded to a near halt in the final quarter of last year, clobbered by dual slumps in housing and credit that caused people and businesses to spend and invest more sparingly.
The Commerce Department reported Thursday that gross domestic product increased at a scant 0.6 per cent pace in the October-to-December quarter.
The National Association for Business Economics expects economic growth in the current January-to-March quarter to slow even further to a meagre 0.4 per cent pace.
Some analysts believe the economy's performance could be even worse and actually shrink during this period.
Under one rough rule, the economy would have to contract for six months in a row for the country to be viewed as being in a recession.
Momentum
The reading on the December quarter - unchanged from an initial estimate a month ago - underscored just how much momentum the economy has lost. In the prior quarter, the economy clocked in at a brisk 4.9 per cent pace.
GDP measures the value of all goods and services produced and is the best barometer of a country's economic health. Economists had thought the newly released fourth-quarter GDP would have been bumped up to a 0.8 per cent growth rate.
The housing picture looked even more bleak in the new report.
Builders slashed spending on housing projects by a whopping 25.2 per cent on an annualised basis in the fourth quarter, the biggest cut in 26 years.
With risks lurking that the problems could intensify and further hurt the economy, Federal Reserve Chairman Ben Bernanke made clear he stands ready to lower a key interest rate again.
- AP