US GDP falls 3.8 percent, but outlook worse elsewhere
The US economy is falling -- maybe not as quickly as expected, but sliding nonetheless into a slump that will last well into this year.
Other advanced nations should be so lucky.
It's clear that America is leading the world into the global slump. Its economy declined 3.8 percent in the fourth quarter, according to new gross domestic product (GDP) data released Friday. But it has an advance scout. Japan, the world's second-largest economy, is likely to see its GDP fall by nearly 10 percent when it reports fourth-quarter results next month.
More trouble in Europe
For all of 2008, the picture doesn't look quite so bad. GDP declines in the third and fourth quarter meant that America's overall growth was 1.3 percent last year (adjusted for inflation). That's very weak compared with much of the world, but it's better than the 2008 results for the European nations that use the euro (1.0 percent), the United Kingdom (0.7 percent), Canada (0.6 percent), and Japan (-0.3 percent), according to estimates by the International Monetary Fund (IMF).
What about this year? The outlook is grimmer. The IMF expects the US economy to contract 1.6 percent for all of 2009 -- a terrible performance, historically speaking. But it's not as terrible as the declines in the euro zone (2.0 percent), Japan (2.6 percent), the UK (2.8 percent), or the newly industrialized Asian economies (3.9 percent), the IMF estimates.
World at near standstill
"We now expect the global economy to come to a virtual halt," the organization's chief economist, Olivier Blanchard, said earlier this week. Growth in other nations, notably China (6.7 percent), India (5.1 percent), the Middle East (3.9 percent), and Brazil (1.8 percent) will offset the contraction among the advanced economies.
Still, the IMF projects world economic growth to fall to its lowest level since World War II.
That means America's economic engine, sputtering though it is right now, will probably pull the world out of the slump just as it led it into one.