Economic Growth Slowed to a Crawl in Q4

Economy in far worse shape than analysts predicted

By Kevin Spak

Posted Jan 30, 2008 9:02 AM CST

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Economic Growth Slowed to a Crawl in Q4 — US Treasury Secretary Henry Paulson (L) and Chairman of the Council of Economic Advisers Ed Lazear (R) hold a briefing on the economy 18 January, 2008 at the White House in Washington, DC. President George W. Bush urged Congress to pass an economic stimulus of 'around one percent' of gross domestic... (Getty Images)

Economic growth braked so violently in the fourth quarter of 2007 that it wiped out a stellar third quarter, dragging annual growth to a 5-year low. Last quarter’s 0.6% GDP growth—after 4.9% pace in Q3—was just half what analysts expected, as the housing component plummeted 24%, its biggest fall since 1981. One key inflation gauge also saw a big 2.7% increase, Bloomberg reports.

“The economy is growing, but it’s not growing fast enough,” said one economist. “The Federal Reserve is going to go half a point today.” Consumer spending, GDP’s biggest component, rose a less-than-expected 2.0%. Recession appears to be looming, and “if we have it, it could be much more painful because of the fragility of the financial sector,” another economist told Bloomberg. (More recession stories.)

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