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.