GNP's 4th-quarter Drop Ends Expansion That Began in Late '82 --- But Decline of 2.1% Was a Better Showing Than Most Forecasts
WASHINGTON -- The U.S. economy landed with a thud in the fourth quarter.</br></br>Ending an expansion that began in late 1982, the economy shrank at a seasonally adjusted rate of 2.1% in the October-December period, the Commerce Department estimated. That was a better showing than most economists had forecast but was still its weakest quarter since it posted a 3.2% decline in the third quarter of 1982.</br></br>However, the report lent credence to the view that this recession will be a relatively short and shallow one. "Barring a major turn for the worse in the Persian Gulf, odds are that the recession should be relatively brief," Commerce Undersecretary Michael Darby said. He cited strong exports and relatively lean business inventories as his reasons.</br></br>But the data did nothing to change the minds of more pessimistic forecasters, who noted that such figures are often revised substantially. "Data will deceive, and data will be revised," said Richard Berner of Salomon Brothers. Economist Lawrence Chimerine of DRI/McGraw Hill said, "I spend my life out there with companies, and the economy is a lot weaker than these numbers suggest."</br></br>As expected, the GNP report reflected a steep drop in auto production. In fact, the fall in output of autos and trucks accounted for nearly all the decline in the gross national product, which is the value of all goods and services produced in the economy. Business and residential construction activity also was off significantly.