Actually, GDP Dropped -5% (Ex Inventories)

The headline GDP number, -3.8%, briefly seemed a breath of fresh air.  Alas, the part of the number that matters, final sales, was lousy.  The country made up the difference by stuffing unwanted goods onto store shelves (WSJ):

Consumer spending fell 3.5% in real terms at an annual rate, nonresidential investment plunged 19.1%, and residential investment cratered at a 23.6% rate. This resulted in a weaker-than-expected 4.9% drop in real final sales — there was no demand from the private sector in the fourth quarter. However, an unexpected add from inventories and a neutral trade contribution resulted in real GDP contracting ‘only’ 3.8% (although nonfarm business output fell 5.5%). –RDQ Economics

Surely consumers will be able to borrow enough from the Obama stimulus to buy up all those extra goods in Q1.

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