Stagnant growth spurs recession fears

An unchanged gross domestic product revision, rising jobless claims and increasing inflation all compounded fears of a U.S. recession. The Commerce Department maintained its projection of slowed GDP growth of just 0.6% in the fourth quarter of 2007. The lackluster showing in GDP, down from a 4.9% increase in the third quarter, was due mainly to drops in residential investment, government spending and inventory investment. The drop in residential investment, which reflects the slumping housing market, was revised from 23.9% up to 25.2%. Increases in consumer spending, the biggest factor in the GDP, was scaled down from 2.0% to 1.9%. Purchases of durable goods were revised lower from 4.2% to 2.3%. Non-durable goods were scaled back to 1.4% from 1.9% earlier. Imports, which subtract from GDP, decreased by 1.9% in the fourth quarter, instead of the 0.3% increase the government stated earlier. Changes in current-dollar GDP were revised from 3.2% to 3.3%, while the price index was changed from 3.8% to 3.9%, showing little variation from the government’s earlier estimates. Jobless claims were up 19,000 for the week that ended in Feb. 23, a grand total of 373,000 after adjustment and a far greater increase than expected.