US economy shrinks 3.8 pct

Bloomberg

Gross domestic product, or GDP, contracted at a 3.8 percent annual pace from October through December, the most since 1982, the Commerce Department said Friday in Washington. A gain in stockpiles contributed 1.3 percentage points to growth, partially compensating for a back-to-back drop in consumer spending. Prices also retreated.

The economy is likely to contract further in the first three months of this year as retailers and manufacturers, from Starbucks Corp. to Boeing Co., this week announced plans to slash payrolls and cut production to get rid of unwanted stocks. Friday’s report will maintain the pressure on President Barack Obama to win quick congressional approval of a fiscal stimulus package."We're in the middle of a sharp contraction in the economy," Dean Maki, co-head of economic research at Barclays Capital Inc. in New York, said before the report. "Businesses are cutting spending in all areas, whether it's employees or investment spending."

GDP was forecast to contract at a 5.5 percent annual pace last quarter.