Plunge seen for fourth-quarter GDP

Economists are expecting an even steeper drop in gross domestic product numbers for the fourth quarter than final Department of Commerce third-quarter numbers, released today. A 6% or worse GDP drop for the fourth quarter is estimated by Alan Gayle, senior investment strategist for Atlanta-based RidgeWorth Capital Management Inc Slated to be released in late January, the forecast is far bleaker than the 0.5% drop released today. “The worst of the tsunami is here and is likely to give us a very weak fourth-quarter performance,” said Mr. Gayle, whose firm has around $70 billion in assets under management. “We’re getting all of the pain and none of the gain right now.” Typically, an economy is considered to be in recession after two consecutive quarters of GDP declines, but the Cambridge, Mass.-based National Bureau of Economic Research Inc. announced Dec. 1 that the U.S has already been in recession mode for a year (InvestmentNews, Dec. 1). The 0.5% GDP decline from the second quarter to the third quarter marked the biggest drop since a 1.4% decline for the 2001 third quarter. “Today’s GDP report further demonstrates that our economy continues to face critical challenges that directly affect families, workers and businesses throughout our nation,” U.S. Commerce Secretary Carlos M. Gutierrez said in a statement.