The US economy contracted at a staggering 6.2% pace at the end of 2008, the worst showing in more than a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession. That's drastically worse than the 3.8% the government originally estimated, and the 5.4% economists predicted. Looking ahead, economists predict consumers and businesses will keep cutting back spending, making the first six months of this year especially rocky.
The new report offered grim proof that the economy's tailspin accelerated in the fourth quarter under a slew of negative forces feeding on each other. The economy started off 2008 on feeble footing, picked up a bit of speed in the spring, and then contracted at an annualized rate of 0.5 percent in the third quarter. Before today's report was released, many were projecting an annualized drop of 5% this quarter. But given the dismal state of the jobs market, an even sharper decline now looks possible.