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Recession worry mounts on weak GDP, job claims 29.02.2008 |
The U.S. economy expanded at a glacial pace in the fourth quarter and applications for jobless aid jumped last week, according to government data that raised fears of a looming recession.
Gross domestic product, which measures total goods and service output in the United States, rose at an annual rate of 0.6 percent. It was slowed by a collapse in spending on new homes and a slump in inventories, and was slightly weaker than the 0.7 percent pace forecast by analysts polled by Reuters.
It was the Commerce Department's second of three readings for fourth-quarter GDP and slowed from 4.9 percent in the previous three months. GDP grew 2.2 percent for all of last year, the weakest since 2002, the department said.
Some analysts say the economy has already slipped into recession, but President George W. Bush disagreed.
"There is no question the economy has slowed down," he told a White House news conference. "I don't think we're headed into a recession, but there is no question we are in a slowdown."
Federal Reserve Chairman Ben Bernanke also warned the economy remained at risk, but dismissed comparisons with the stagnation of the 1970s, when inflation hit double-digits.
"I don't anticipate stagflation," Bernanke said under questioning by the Senate Banking Committee. "I don't think we're anywhere near the situation that prevailed in the 1970s. I do expect inflation will come down."
U.S. stocks slipped after the weaker-than-expected GDP and the jump in weekly jobless claims. Hopes for lower interest rates boosted U.S. government debt prices and pushed the dollar to a record low against the euro.
Reuters
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 Recession worry mounts on weak GDP, job claims
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