As reported by The Bureau of Economic Analysis of the U.S. Department of Commerce, the U.S. economy has turned in one of the worst performances in the last quarter century during the final months of 2008. Current indicators are exposing fears that future months could even be more grim. The report, issued on January 30th, 2009, indicated that in its preliminary estimates the real gross domestic product decreased at an annual rate of 3.8% in the fourth quarter of 2008. This decline is the largest since 1982. Although the news was undeniably negative, it did not exceed the record 10.4% quarterly drop of post-war 1958. Some economic experts had predicted a deeper decline.

Real GDP is the output of goods and services produced by labor and property located in the United States. The fall is a comparison from the third quarter to the fourth quarter. In the third quarter, real GDP decreased 0.5%. Although the report is based on preliminary estimates from source data, more often than not, adjustments made on the final report of February 27th are not inherently different from the estimate.

The GDP decrease primarily reflected negative results across the board, including exports, personal consumption expenditures, equipment and software, and residential fixed investment.

Increased government spending somewhat offset positive contributions from private inventory investment. Imports, which are a subtraction in the calculation of GDP, also decreased. The largest contributors to the steep decline were a downturn in exports and a much larger decrease in the equipment and software industry. The most notable offset was a much larger decrease of imports stemming from a reduced U.S. market– as discretionary spending by U.S. consumers has fallen off sharply due to growing recessionary attitudes.

Final sales of computers subtracted less than 0.01 percentage point from the change in real GDP after subtracting 0.01 percentage point from the third-quarter change. Motor vehicle output subtracted 2.04 percentage points from the fourth-quarter change in real GDP after contributing 0.16 percentage point to the third-quarter change.

The measurement and analysis of GDP in future quarters will have to be considered carefully, with and results analyzed in a more stringent manner due to the large influx of government spending that is expected to occur after a economic stimulus spending bill is passed into law and the affects thereof apparent. As outlined above, real government spending and its affects thereof, may not take place for 1-2 financial quarters, with another quarter possibly needed for the results to filter into measurable financial results.