RAPAPORT...  The U.S. economy contracted 2.4 percent in 2009, the biggest drop since 1946, according to the U.S. Commerce Department. This decrease in the country's real gross domestic product (GDP) primarily reflects negative contributions from nonresidential fixed investments, exports, private inventory investments, residential fixed investments and personal consumption expenditures. Spending contractions from the private sector, however, were partially offset by federal government spending. Imports, which are subtracted in GDP calculations, also decreased.

The Commerce Department also reported that the price index for gross domestic purchases increased just 0.6 percent during 2009, compared with an increase of 1.9 percent in 2008. Meanwhile, the U.S. Labor Department reported that wages and benefits were up only 1.5 percent in 2009, representing the weakest growth since 1982. Current dollar GDP decreased 1.3 percent, or $182.7 billion, in 2009, whereas this measure increased by 2.6 percent, or $363.8 billion, in 2008.

Fourth-Quarter Numbers

An early growth estimate for the fourth quarter of 2009 softened an otherwise gloomy year. The estimate reflected a 5.7 percent increase caused by the dramatic slowdown of inventory liquidation across the business sector, which alone contributed 3.4 percentage points. Consumer spending as a whole was weaker in the fourth quarter than in the third quarter, but did increase by 2 percent.

Private businesses decreased their inventories by $33.5 billion in the fourth quarter, following decreases of $139.2 billion in the third quarter and $160.2 billion in the second quarter of 2009.

The price index for gross domestic purchases, which included food and energy, increased 2.1 percent in the fourth quarter, compared with an increase of 1.3 percent in the third quarter.

Real final sales of domestic products — calculated by subtracting any change in private inventories from the GDP— increased by 2.2 percent in the fourth quarter, compared with an increase of 1.5 percent in the third quarter. 

Revisions to this data will be released on February 26, 2010, while the final figures for the fourth quarter of 2009 will be released on March 26, 2010.

LH