Meltdown 101: GDP by the numbers

[January 31, 2009]  NEW YORK (AP) -- The Gross Domestic Product report is often described as the nation's economic report card. These days, it's looking more like the medical chart of a patient in intensive care.

The Bureau of Economic Analysis estimated Friday that GDP shrunk at a 3.8 percent annual rate from the third quarter to the fourth quarter, edging a scant 1.3 percent higher for the full year. Fourth-quarter exports, consumer spending and sales of equipment and software all declined.

GDP measures the market value of everything produced by labor, plants and properties in the U.S. - a total of $14.26 trillion for the fourth quarter. The GDP report lays out, one number at a time, what's chipping away at economic growth.

Motor vehicle output shaved 2.04 percentage points from the fourth-quarter change in GDP, while a spike in business inventories added 1.32 percentage points. The inventory increase may sound positive, but it's worrisome: At a time when sales are falling, it likely means companies have goods on hand they're unable to sell. That could mean more cuts in production at factories, declining orders from stores and job cuts.

One thing the GDP numbers don't include is one of the strongest components of the economy: federal loans and purchases of financial assets. Those aren't recorded in the GDP accounts, because GDP doesn't include exchanges of financial claims and liabilities. While Friday's report included an increase in fourth-quarter federal spending, the actual number including those loans is certain to be much, much greater when it's reported later by the Federal Reserve.

Here are some highlights of Friday's report, by the numbers.

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PRICES FALL

4.6 percent: Decline in price index in the fourth quarter

4.5 percent: Increase in price index in the third quarter

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SPENDING SLUMPS

$223.8 billion: Increase in personal spending on goods and services from 2006 to 2007

$73.7 billion: Decrease in personal spending from the third quarter of 2008 to the fourth quarter

$42.8 billion: Decrease in vehicle and parts spending from third to fourth quarter

$40.6 billion: Decrease in food spending from third to fourth quarter

$27.9 billion: Decrease in business spending on trucks and other transportation equipment from third to fourth quarter

$35.4 billion: Decrease in business spending on computers and software from third to fourth quarter

$14.7 billion: Decrease in spending on furniture and household goods from third to fourth quarter

$10.4 billion: Decrease in spending on clothes and shoes from third to fourth quarter

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INCOME DROPS TOO, THOUGH NOT AS MUCH

3.5 percent: Fourth-quarter decrease in personal consumption

2.4 percent: Fourth-quarter decrease in disposable personal income

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INVENTORY BOUNCES BACK UP

$6.2 billion: Increase in private business inventories in the fourth quarter

$29.6 billion: Decrease in private business inventories in the third quarter

$50.6 billion: Decrease in private business inventories in the second quarter

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PERSONAL SAVINGS RATE INCREASES

0.2 percent: Savings as a portion of disposable personal income in the first quarter of 2008

2.9 percent: Savings as a portion of disposable personal income in the fourth quarter of 2008

$20.6 billion: Personal savings in the first quarter of 2008

$310.3 billion: Personal savings in the fourth quarter of 2008

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THE GOVERNMENT RAMPS UP SPENDING ...

$40.9 billion: Increase in government spending from 2006 to 2007

$58.9 billion: Increase in government spending from 2007 to 2008

$29.2 billion: Increase in government spending from the second to third quarter of 2008

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... ALTHOUGH NOT ENOUGH TO OFFSET OTHER DECLINES

0.38: Percentage points government spending added to fourth quarter's change in GDP

2.47: Percentage points declining personal spending subtracted from fourth quarter's change in GDP

1.15: Percentage points declining motor vehicle and parts sales subtracted from fourth quarter's change in GDP

2.26: Percentage points declining nonresidential construction (office buildings, hospitals) subtracted from third quarter's change in GDP

[Associated Press; By ELLEN SIMON]

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