• GDP
    • -3.8% : unadjusted
      • Consumer spending dropped at a 3.5% annual rate, following a 3.8% drop in Q3
    • -5.1% adjusted for the impact of inventories for pre-ordered goods
    • Question: what does 4Q09 GDP look like?
      • Fewer stores and fewer orders
    • If they plan for flat demand, then…
      • Inventories will build according to the -5.1% scenario, and
      • GDP will be negatively impacted on a comparable, YoY, basis
      • Short answer: we get a credit now from inventories that we have to pay for later
    • Nonetheless — GDP was forecast to decline 5.5% in 4Q08
  • Unemployment — 7.2%, up from 4.9% a year earlier
    • 524k workers cut in December, with total job cuts for 2008 at 2.6mm
  • Business Investment
    • Declined 19% at an annual rate in Q4, the most since 1975
    • Investment in equipment and software dropped at a 28% pace, the most in 50 years
  • Chicago PMI — 33.3

    • New orders: dwon from 31.5 to 30.7
    • Production: down from 32.4 to 29.7
    • Raw Materials: increased from 32.7 to 39.8
    • Order Backlogs: increased from 26.3 to 26.5

It looks like the economy carried a lot of negative momentum into the first quarter

—Former Federal Reserve Governor Laurence Meyer