As the longest recession in 25 years drags on, the Commerce Department reported today that the nation's GDP was declining even before the fiscal crisis hit—and analysts believe that it's tumbling even more quickly now.
The GDP, which measures the goods and services produced by the nation's economy, shrank at an annual rate of 0.5 percent in the quarter from July to September. That rate had been predicted a month ago, and marks the largest decline since a fall of 1.4 percent in 2001.
Analysts say that GDP is decreasing even more quickly in this quarter, but that it could mark the recession's lowest point. Many predict that the recession will end in June 2009, helped along by a massive infusion of money from President-elect Barack Obama's proposed stimulus plan. Even under that scenario, it means that the recession would have lasted for a year and a half—making it the longest recession since such data was first kept in 1947.
As well as being one of the longest recessions on record, this one also has had particularly widespread effects, say analysts. Past recessions have been inconsistent, affecting certain sectors or industries but not others. This one, however, has had consequences across the board, with layoffs numbering more than 1 million so far this year in businesses as varied as Bank of America, Anheuser-Busch, and Circuit City. Job losses nationwide totaled 533,000 in November alone.
And industries that have asked for cash assistance from the federal government have included not only banks and Detroit automakers, but most recently the commercial real estate industry, which is asking to be included among recipients of a $200 billion lending facility created to prop up the consumer debt market.
Other nations announced their own glum data today, as well. Britain's GDP fell 0.6 percent in the same quarter, the fastest rate since 1990. New Zealand reported its economy contracting by 0.4 percent, worse than the 0.2 percent drop in the second quarter. And other countries that have reported undergoing recessions this year include Sweden, Japan, Italy, Hong Kong, Singapore, and Germany.