Real gross domestic product -- or GDP -- contracted at a seasonally-adjusted annual rate of 6.3 percent in the fourth quarter 2008 from the previous quarter, according to revised estimates released Thursday by the Bureau of Economic Analysis within the U.S. Department of Commerce
. This rate was revised down from a previous estimate of a 6.2 percent decline. The downward revision was driven by "negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partially offset by a positive contribution from federal government spending."
The nation saw downturns in sectors across the board. Real personal consumption contracted 4.3 percent in the fourth quarter, down from the 3.8 percent decline in the previous quarter, according to the data. Real exports of goods and services decreased 23.6 percent in the fourth quarter, from a 3 percent increase in the third quarter, while real imports of goods and services fell 17.5 percent in the quarter compared with a 3.5 percent third-quarter decrease.
Real federal government consumption expenditures and gross investment increased 7 percent in the quarter -- from a 13.8 percent increase in the third quarter -- while national defense increased 3.4 percent, from an 18 percent increase in the previous quarter, according to the Commerce Department. Corporate profits -- with inventory valuation and capital consumption adjustments -- decreased $250.3 billion in the quarter, compared with an $18.5 billion third-quarter decrease. Final sales to domestic purchasers -- or domestic demand -- fell at a 5.8 percent annual rate.
Read the GDP release.
Early reports for first-quarter housing starts and consumer confidence, however, beg the question of whether GDP is likely to turn around sometime soon. The Commerce Department in mid-March announced a surprising 22 percent surge in housing starts
in February, while the Federal Housing Finance Agency
reported Tuesday that home prices --based on purchase prices of homes backed by Fannie Mae (FNM)
or Freddie Mac (FRE)
mortgages -- rose 1.7 percent from December
2008 to January 2009.
With the uptick in home value, inventory, and record-low mortgage rates reported Thursday by Freddie in a weekly survey, market optimists have suggested the trends point to a possible bottoming out of housing. A Reuters/University of Michigan Consumer Sentiment Index released last week
showed that consumer confidence and specifically longer-term outlook improved slightly in early March. It remains unclear whether lingering uncertainty will counter these developments and keep the nation's GDP weak in coming reports.
Diana Golobay at firstname.lastname@example.org
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.