4TH QUARTER GDP FALLS; REP. MALONEY CALLS FOR IMMEDIATE ACTION

2nd Straight Quarter of Contraction

Economy Needs Recovery Plan Now

Washington, D.C. – Statement of Congresswoman Carolyn B. Maloney, Chair of the Joint Economic Committee, responding to today’s announcement by the Bureau of Economic Analysis that GDP fell by 3.8 percent in the last quarter of 2008:

“Today’s announcement that economic activity in the U.S. fell 3.8 percent last quarter confirms what Democrats have been saying for months – the economy is fundamentally unsound and it will only get worse unless a fiscal stimulus package is implemented immediately.  The U.S. has not seen a quarterly decline in economic activity this large since 1982.   Mass layoffs announced in January by big companies are foreshadowing a dismal first quarter this year.  The American Recovery and Reinvestment Act, which passed the House of Representatives this week, makes critical investments in infrastructure and new technology, and provides tax rebates for middle class families who will spend the money quickly.  Our plan will not only boost growth and job creation, but it will also help to restore confidence and put us on the road to economic revitalization.”

Some quick facts from the 4th Quarter GDP Report from the Bureau of Economic Analysis:

• The largest contributors to the decline in GDP from the 3rd Quarter to the 4th were a downturn in exports and investment in equipment and software.  The most notable offset was a much larger decrease in imports.

• Consumer spending, which typically comprises more than two-thirds of GDP growth, declined 3.5 percent after falling 3.8 percent in the third quarter.  Reduced spending – on both durable and nondurable goods – subtracted 2.5 percentage points from GDP.

• Residential Fixed Investment fell 23.6 percent in the fourth quarter, a much larger decline than in the second or third quarters, indicating that the decline in the housing sector is snowballing as constrained mortgage lending and distressed home sales push prices below 2004 levels.

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.
 www.jec.senate.gov
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