Obama Economy: GDP Rises 1.3% for 2008, Crashes at 3.8% Rate in 4th Qtr.

The economy shrank at its fastest pace in nearly 27 years in the fourth quarter, government data showed, sinking deeper into recession as consumers and business cut spending, Reuters reported today.

The Commerce Department on Friday said gross domestic product, which measures total goods and services output within U.S. borders, plummeted at a 3.8 percent annual rate, the lowest pace since the first quarter of 1982, when output contracted 6.4 percent. GDP fell 0.5 percent in the third quarter. These were the first consecutive declines in GDP since the fourth quarter of 1990 and the first three months of 1991.

Analysts polled by Reuters had forecast GDP contracting 5.4 percent in the fourth quarter. The U.S. economy slipped into recession in December 2007, driven by the collapse of the housing market and resulting global credit crisis.

For 2008, GDP rose 1.3 percent, the slowest pace of growth since 2001, when the economy expanded 0.8 percent.

The 1.3 percent rise in the GDP for 2008 is counter to reports in the media claiming that the country's economy is in the worst shape since the Depression.

In 1982, domestic output contracted at 6.4 percent.

President Reagan's tax cuts are widely credited as reversing the downward economic trend.

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