U.S. 4th Quarter GDP Hits 3.5 Percent, Annualized GDP Only 0.6 Percent

Washington, DC (AHN) - While the U.S. economy registered a 3.5 percent fourth quarter growth rate, the slower pace of growth in previous quarters pulled down the annualized growth rate of the American economy to only 0.6 percent.

It was the weakest performance of the world's largest economy in five years. Economist attributed the slowdown to the worsening subprime mortgage crisis that had resulted to a record-high number of foreclosures, lesser consumer spending and high oil prices.

Michael Feroli, an economist at JPMorgan Chase and Company, told Bloomberg, "We're getting a picture of the economy that looks like what you would expect for a recession."

The official GDP report will be released by the U.S. Commerce Department Thursday morning. Bloomberg's survey of 70 sources gave a range from zero to only 1 percent economic expansion.

Nevertheless, the 3.5 percent 4th quarter figure is better than third quarter's 2 percent and exceeded by 0.5 percent projections by economists polled by MarketWatch.

With the slight uptick, some economist project a rosier first quarter GDP for 2008 at 2.1 percent, but they did not present any statistics to bolster their forecast.

David Greenlaw, economist of Morgan Stanley, explained to MarketWatch, "...There is also evidence of some underlying improvement in a few sectors and as the headwinds related to housing and motor vehicles starts to abate, we appear to be setting the stage for sold economic growth in coming quarters."