WASHINGTON, Jan. 30 (UPI) -- The U.S. Department of Commerce said the recession worsened in the fourth quarter with gross domestic product shrinking at an annual rate of minus 3.8 percent.
The economy's contraction was at annual rate of 0.5 percent in the third quarter, but the deteriorating fourth quarter figure was not as bad as economist predicted. The consensus forecast was for the economy to shrink 5.4 percent.
In the second quarter the economy grew 2.8 percent.
The fourth quarter estimate -- a preliminary figure -- included a drop of 3.5 percent in consumer spending with a 22.4 percent drop in expenditures for durable goods. Non-durable goods spending fell 7.1 percent, while spending for services rose 1.7 percent.
The price index for gross domestic purchases fell at an annual rate of 4.6 percent, compared with a 4.5 percent increase in the third quarter.
Core prices, excluding food and energy prices, rose 1.2 percent following a rise of 2.8 percent in the third quarter.
Christina Romer, chair of the Council of Economic Advisers, said an "aggressive, well-designed fiscal stimulus is critical to reversing this severe decline."
"Immediate action to support both the financial sector and overall demand is essential," she said.
