Friday, February 27, 2009
Shares across the world plummeted today after news the U.S. economy contracted a staggering 6.2 per cent at the end of last year.
The Commerce Department report showed the biggest GDP drop in 25 years and far worse than the 3.8 per cent estimated by the government last month.
Consequently, London’s FTSE 100 index plunged 127.35 points to 3,788.29 and America’s Dow Jones fell 132.45 points to 7,049.63.
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Frankfurt’s Dax fell 4.1 per cent while French stocks dropped 3.3 per cent.
The report also showed the economy sinking much faster than the 5.4 per cent annual decline economists expected.
It found the economic tailspin rapidly gained pace in the fourth quarter after a range of negative forces fed off each other.
Before today’s report, many economists were projecting an annual drop of 5 per cent in the current January-March quarter.
But given the dismal state of the jobs market some believe an even sharper decline in first-quarter GDP is possible.
The nation’s unemployment rate is now at 7.6 per cent – the highest in more than 16 years - and the Federal Reserve expects that to rise to almost nine per cent this year.
A smaller decline in the economy is expected for the second quarter of this year.
But the new GDP figure marked the weakest quarterly showing since an annual drop of 6.4 per cent in the first quarter of 1982 when the country was suffering an intense recession.
This article was posted: Friday, February 27, 2009 at 11:15 am