WASHINGTON (AFP) — Revised data Thursday showed a steep 6.3 percent pace of decline in US economic output amid a deep recession, but the figures failed to quell debate on whether the economy has hit bottom.
The Commerce Department made a modest revision from last month's estimate of a 6.2 percent annualized drop in gross domestic product (GDP).
The slump was the steepest since 1982 but not as bad as the 6.6 percent annualized drop expected on average by private forecasters.
The revision, the final estimate for the October-December quarter, did not affect the overall growth pace for 2008, which at 1.1 percent was the weakest since 2001.
The economy, in recession since December 2007 based on the recognized arbiter of business cycles, was dragged down in the fourth quarter by weak consumer spending, the ongoing slide in real estate and declines in business investment.
The revisions reflected weaker exports and business investment, and would have shown an even worse decline if not for a heftier decline in imports, which has a negative impact on GDP.
The report, reflecting what many economists call the worst slump since the 1930s, covers a period that ended nearly three months ago, and does not reflect the recent efforts to stimulate growth and ease credit.
Figures showing economic output for early 2009 will not be available for another month, but some analysts say signs are emerging that at least some areas of the economy have reached bottom, and could be ready to rebound.
Augustine Faucher, economist at Moody's Economy.com, said more grim data may be coming.
"The economy is caught in a number of self-reinforcing negative cycles. Job losses are weighing on consumer spending, the financial market crisis is hampering credit flows, foreclosures continue to push down house prices, and the global recession is causing imports to fall," he said.
He said that amid a vast effort to stimulate growth and ease credit, "tere have been some encouraging signs recently that the housing market may be righting itself. Still, the rest of 2009 will be difficult. Real GDP is likely to fall well into the second half of the year."
Nariman Behravesh, chief economist at IHS Global Insight, said the current quarter may show an even worst level of decline.
"All the incoming data suggest that the economy will contract by a staggering 7.0 to 8.0 percent in the first quarter, before the economy begins to stabilize," he said.
Behravesh said he expects the pace of decline to moderate to 2.0 to 3.0 percent in the second quarter and that "subsequent quarters should show a steady improvement."
"Much has been made of the fact that some incoming data -- related to housing and consumer spending -- have stabilized and bounced up a little. This does suggest that the US economy may be approaching bottom," he said.
"Nevertheless, other indicators like exports and capital spending are still falling at a rapid clip, and the slight improvement in the data will not prevent another big contraction in first quarter real GDP. On the other hand 'the worst of the worst' is probably behind us."
In one of the freshest bits of economic data, the Labor Department said the number of new jobless claims in the United States rose by 1.2 percent to 652,000 during the week ending March 21.
But Robert Brusca at FAO Economics said it was encouraging the see a decline from a peak in jobless claims two weeks earlier.
"On average claims peak about eight weeks before the end of the recession," he said.
Data Wednesday showed sales of new US homes rose a stronger than expected 4.7 percent in February, after six months of declines.
The gain was the latest in a series of positive surprises for the US housing market, which when it collapsed plunged the economy in recession in December 2007.
A separate report Wednesday showed orders for US-made durable manufactured goods unexpectedly rise for the first time in February, after six months of decline.
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