Economy February-27 2009

Economy shrinks even more than expected in 4th quarter
The economy contracted at a staggering 6.2 % pace at the end of 2008, the worst showing in a quarter-century.
The faster downhill slide in the final quarter of last year came as the financial crisis -- the worst since the 1930s -- intensified.

Consumers at the end of the year slashed spending by the most in 28 years. They chopped spending on cars, furniture, appliances, clothes and other things. Businesses retrenched sharply, too, dropping the ax on equipment and software, home building and commercial construction.

The nation's unemployment rate is now at 7.6 percent, the highest in more than 16 years. The Federal Reserve expects the jobless rate to rise to close to 9 percent this year, and probably remain above normal levels of around 5 percent into 2011.

For all of 2008, the economy grew by just 1.1 percent, weaker than the government initially estimated. That was down from a 2 percent gain in 2007 and marked the slowest growth since the last recession in 2001.

In the fourth quarter, consumers cut spending at a 4.3 percent pace. That was deeper than the initial 3.5 percent annualized drop and marked the biggest decline since the second quarter of 1980.

Businesses slashed spending on equipment and software at an annualized pace of 28.8 percent in the final quarter of last year. That also was deeper than first reported and was the worst showing since the first quarter of 1958.

Fallout from the housing collapse spread to other areas. Builders cut spending on commercial construction projects by 21.1 percent, the most since the first quarter of 1975. Home builders slashed spending at a 22.2 percent pace, the most since the start of 2008.

http://www.latimes.com/business/la-fi-gdp-revise28-2009feb28,0,5419930.story

Inflation Diagram the US

http://www.bos.frb.org/economic/nerr/rr1997/winter/hell97_1.htm

Europe Economic Slowdown Fourth Quarter 2008

European economies contracted in the fourth quarter of last year, with some countries registering the worst figures in decades, official data shows.

Unemployment Rises in Nearly All Metro Areas

The Labor Department Wednesday said jobless rates rose in 363 of the 369 metropolitan areas from a year earlier.

Elkhart-Goshen, Ind., had the largest jobless rate increase from December 2007, up 10.6 percentage points to 15.3%. At second place, Dalton, Ga., rose 6.2 percentage points to 11.2%.

Both areas were struck by manufacturing layoffs. On Friday, the Labor Department will release its January employment report; economists see the unemployment rate rising to 7.5% from 7.2% during December, with non-farm payrolls shrinking by 524,000 jobs.

The recession deepened at the end of 2008. People are afraid of losing their jobs and are slashing spending. Lower consumer spending means less revenue for businesses. Companies are laying off workers to cut costs and protect profits or stem losses. The economy fell at a rate of 3.8% during fourth-quarter 2008, the government said in a report last week that suggested the slump might worsen in the current, first quarter of 2009.

Wednesday’s Labor Department data on metropolitan area joblessness showed 168 of them in December reported unemployment rates of at least 7.0%. That is up from 33 areas a year earlier.

El Centro, Calif., continued to record the highest unemployment rate, 22.6%. –Jeff Bater
http://blogs.wsj.com/economics/2009/02/04/unemployment-rises-in-nearly-all-metro-areas/

America’s GDP Decreased at an Annual Rate of 3.8% in the Fourth Quarter of 2008

America’s GDP decreased at an annual rate of 3.8% in the fourth quarter of 2008, according to the official first estimate. Had it not been for a sharp rise in the quarter of inventories, economic output would have fallen by just over 5%.

Jobs Lost During the Recession 2008-2009

http://macromarketmusings.blogspot.com/

Who Pays Income Taxes? See Who Pays What

Who Pays Income Taxes? See Who Pays What

For Tax Year 2006

Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid

Top 1% $388,806 39.89%

Top 5% $153,542 60.14%

Top 10% $108,904 70.79%

Top 25% $64,702 86.27%

Top 50% $31,987 97.01%

Bottom 50% <$31,987 2.99

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

http://www.ntu.org/main/page.php?PageID=6