Economic Growth Slowed to a Crawl in Q4

Economy in far worse shape than analysts predicted
By Kevin Spak,  Newser Staff
Posted Jan 30, 2008 9:02 AM CST
US Treasury Secretary Henry Paulson (L) and Chairman of the Council of Economic Advisers Ed Lazear (R) hold a briefing on the economy 18 January, 2008 at the White House in Washington, DC. President George...   (Getty Images)
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(Newser) – Economic growth braked so violently in the fourth quarter of 2007 that it wiped out a stellar third quarter, dragging annual growth to a 5-year low. Last quarter’s 0.6% GDP growth—after 4.9% pace in Q3—was just half what analysts expected, as the housing component plummeted 24%, its biggest fall since 1981. One key inflation gauge also saw a big 2.7% increase, Bloomberg reports.

“The economy is growing, but it’s not growing fast enough,” said one economist. “The Federal Reserve is going to go half a point today.” Consumer spending, GDP’s biggest component, rose a less-than-expected 2.0%. Recession appears to be looming, and “if we have it, it could be much more painful because of the fragility of the financial sector,” another economist told Bloomberg.