WASHINGTON (Reuters) – The "Great Recession" was even greater than previously thought, and the U.S. economy has skated uncomfortably close to a new one this year.
New data on Friday showed the 2007-2009 U.S. recession was much more severe than prior measures had found, with economic output declining a cumulative of 5.1 percent instead of 4.1 percent.
The report also showed the current slowdown began earlier and has been deeper than previously thought, with growth in the first quarter advancing at only a 0.4 percent annual pace.
The data indicated the economy began slowing in the fourth quarter of last year before high gasoline prices and supply chain disruptions from Japan's earthquake had hit, suggesting the weakness is more fundamental and less temporary than economists had believed.
The annual revisions of U.S. GDP data from the Commerce Department showed economic growth contracted at an annual average rate of 0.3 percent between 2007 and 2010. Output over that stretch had previously been estimated to have been flat.
At the depth of the recession in the fourth quarter of 2008, output plummeted at an annual rate of 8.9 percent -- the steepest quarterly decline since 1958, and 2.1 percentage points more than previously reported.
The recession was already the deepest since the Great Depression and, while it still pales in comparison, the data help explain why it is taking so long to shake off its legacy.
"The general picture of the recession remains pretty much the same, it was a record decline before and now it is a even bigger decline," Steven Landefeld, the director of the department's Bureau of Economic Analysis, told reporters.
The economy was weaker in both 2008 and 2009 than had been thought. Gross domestic product contracted 0.3 percent in 2008; the department had previously reported it was flat. In 2009, it shrank 3.5 percent instead of 2.6 percent.
In the first quarter of 2009, the economy shrank at a 6.7 percent pace, 1.8 percentage points more than had been thought.
When growth finally resumed in the second half of 2009 after four straight quarters of contraction, it was less vigorous than thought. Growth in the fourth quarter of 2009 was cut to a 3.8 percent pace from a previously reported 5.0 percent rate.
The revisions also showed weaker income growth. Disposable income adjusted for inflation grew at an average annual rate of 0.6 percent between 2007 and 2010, rather than 1.2 percent.
At the same time, households saved less in 2009 and 2010. Perhaps surprisingly, corporate taxes were stronger than had been thought in 2009 and 2010.
TROUBLING 2010-2011 SLOWDOWN
The data was released Friday along with the government's first estimate of second quarter GDP, which advanced at a meager and weaker-than-expected 1.3 percent rate
Not only did the economy skirt perilously close to a contraction in the first quarter, growth in the fourth quarter of last year was at a tepid 2.3 percent annual rate, not the solid 3.1 percent pace that had been believed.
The downward revision to the first quarter was even sharper. Previous figures had shown the economy advanced at a 1.9 percent rate.
A combination of bad weather, high gasoline prices and disruptions to manufacturing after the March earthquake in Japan had been blamed for this year's slowdown.
But the surprisingly weak tone in the data so far this year and the downward revisions to growth in the fourth quarter before those headwinds hit suggest those transitory factors bear less of the blame than thought.
(Reporting by Lucia Mutikani, editing by Neil Stempleman)
WASHINGTON – The 2007-2009 recession, already in the record books as the worst in the 66 years since the end of World War II, was even worse than previously thought.
From the start of the recession at the end of 2007 to the end in June of 2009, the U.S. economy shrank 5.1 percent. That is 1 percentage point worse than the previous estimate that the recession reduced total output during that period by 4.1 percent.
The new estimates emerged from the annual revision of economic data prepared by the Commerce Department's Bureau of Economic Analysis and released Friday.
Among the previous 10 postwar recessions, output in only two dropped by more 3 percent. In the 1957-58 recession, the economy contracted 3.7 percent. And during the 1973-1975 downturn, the economy fell 3.2 percent from the start of the recession to the end.
The government attributed the bigger declines in output in part to weaker consumer spending and business investment than previously estimated.
By year, the government's new figures show that the economy took a much bigger hit in 2009, when output shrank 3.5 percent. The previous estimate had shown a decline of 2.5 percent that year.
In 2008, the new estimate shows the economy contracted by 0.3 percent. The previous estimate had indicated that output was unchanged for that year compared with 2007.
The last recession began in December 2007 and lasted until June 2009. Though the economy has been growing since then, growth has been subpar. And the unemployment rate has remained elevated; it's now 9.2 percent.
The revisions showed that growth in 2010 was a bit stronger than previously estimated. They put growth for all of 2010 at 3 percent, up from a previous estimate that the economy grew 2.9 percent last year.
The revisions to the country's gross domestic product, the total output of goods and services, used more complete data for such items as consumer and business spending.
The government's annual revisions are released each July, along with its first estimate of growth for the April-June quarter of the current year.
NEW YORK – Chevron says profit jumped 43 percent in the second quarter as higher oil and gasoline prices made up for a decline in oil production.
The San Ramon, Calif. oil giant on Friday reported earnings of $7.7 billion, or $3.85 per share, for the three months ended June 30. That compares with $5.4 billion, or $2.70 per share, in the year-ago period. Revenue increased 31 percent to $66.7 billion.
Analysts had expected earnings of $3.51 per share, according to FactSet.
The results at Chevron Corp. mirror similar big gains for other major oil companies. In the second quarter, Exxon Mobil Corp.'s earnings rose 41 percent to $10.7 billion while Royal Dutch Shell's profit nearly doubled to $8.7 billion.