Economic Growth Slows Sharply for Quarter

  • Playlist
  • Download
  • Embed
    Embed <iframe src="http://www.npr.org/player/embed/18536437/18532145" width="100%" height="290" frameborder="0" scrolling="no">
  • Transcript

The Commerce Department says the U.S. gross domestic product grew at just 0.6 percent in the final quarter of 2007. That is the weakest growth rate in five years for the GDP.

RENEE MONTAGNE, host:

NPR's business news starts with the economy barely growing.

The government's latest numbers on the economy are out, and they show a sharp slowdown at the end of 2007. Growth, as measured by the Gross Domestic Product, registered a mere 6/10 of a percent. That compares with brisk growth of almost 5 percent the previous quarter.

To help us figure out what these numbers mean, we go to NPR's Adam Davidson.

Good morning.

ADAM DAVIDSON: Good morning.

MONTAGNE: And what do the numbers tell us?

DAVIDSON: Well, I think there's no way to talk about this without saying this is really bad news. The GDP is the measure of the economic activity, pretty much all activity in the U.S. And this is telling us that it grew very anemically. Economists say that if the number is below 1 percent, it sort of feels like a recession to most people in the economy.

And so this means that in the last three months of 2007, the economy was really, really slow, and it was throughout the economy. We had - many had hoped that this slowdown would be restricted to the housing sector, which did fall way more dramatically than everything else. But now we learned that in a broad way many sectors of the economy fell, which is, obviously, worse news.

Now, I should note that this is a first estimate. The government often revises this number. It could go up. It could go down. So we don't fully know. But what we do know is that Federal Reserve is looking at this number very closely, and later today when they make their announcement this increases the likelihood that they will lower interest rates aggressively to get this economy growing again.

MONTAGNE: So did this mean, though, Adam, that a recession is in the cards?

DAVIDSON: It increases the likelihood that a recession is in the cards. This kind of slow growth, a big drop from the third quarter of 2007 to the final quarter, suggests that that drop could keep on dropping. But there's so much talk about recession in the media among economists; it's worth remembering we don't know yet. There's a decent chance that the economy will slow dramatically. It'll be painful for a little while and then it will start growing.

I think today there was some numbers that came out from the private payroll company ADP. That's kind of a hint of how employment is doing. And they showed that employment for January grew far faster than anyone expected, which was very good news. That suggests that maybe the economy isn't doing as badly as we thought.

We'll find out for sure when the government releases its data at the end of the week. But people will be paying very close attention to all of this economic data to figure out if we are in fact in a recession.

MONTAGNE: NPR's Adam Davidson. Thanks very much.

DAVIDSON: Thank you, Renee.

Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.

Senate Takes Up Rebate Stimulus Package

The Senate Finance Committee takes up its own version of an economic stimulus package Wednesday, a day after the House passed a package worth nearly $150 billion dollars.

The Senate version would give tax rebates to a broader group including wealthy taxpayers and social security recipients.

On Tuesday, the House passed its plan easily, winning strong bipartisan and White House support. It includes tax rebates and business tax breaks designed to pump money into the sluggish economy.

House Speaker Nancy Pelosi called on the Senate to pass the aid package quickly, but that is unlikely.

Connecticut Democrat Christopher Dodd said senators would like to see the plan to offer more assistance.

"I'm confident that when Senate works its will there will be some additions to the stimulus package — I think in the unemployment area, as well in low income energy assistance, and particularly food stamps. I don't want to overload that, and I understand that we must act quickly or the value of the economic stimulus package gets lost," Dodd said.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.