The U.S. economy contracted more sharply than initially estimated in the fourth quarter, government data showed on Friday, as exports plunged and consumers cut spending by the most in over 28 years amid a severe recession.
The Commerce Department said gross domestic product, which measures the total output of goods and services within U.S. borders, fell at an annual rate of 6.2 percent in the October-December quarter, the deepest slide since the first quarter of 1982. The government last month estimated the drop in fourth-quarter GDP at 3.8 percent.
The weaker GDP estimate reflected downward revisions to inventories and exports by the department.
The decline was worse than analysts' expectations for a 5.4 percent contraction in fourth-quarter GDP. The economy expanded 1.1 percent in 2008, the slowest pace since 2001, the department said.
Consumer spending, which accounts for more than two-thirds of domestic economic activity, dropped at a 4.3 percent rate, the biggest fall since the second quarter of 1980, as household wealth plunged. That compared with a 3.5 percent fall estimated last month.
Exports, until recently one of the few pillars supporting the distressed economy, tumbled at a 23.6 percent annual rate, the steepest plunge since 1971. That was revised from the 19.7 percent drop estimated in last month's report.
Inventories, which minimized the fall in GDP last month after being estimated up a surprising $6.2 billion, were revised to show a $19.9 billion decline in the fourth quarter.
Business investment fell at a 21.1 percent rate, the largest drop since 1975, from a previously estimated 19.1 percent. Residential investment fell 22.2 percent in the fourth quarter.
The deteriorating economy is dampening inflation pressures, with the personal consumption expenditures price index diving a record 5 percent. Excluding food and energy, prices rose 0.8 percent in the fourth quarter, the smallest advance since a matching increase in 1997.