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Today, economists forecast that the Gross Domestic Product would drop at an annual rate of 3.8 percent in the final quarter of 2008 (it takes them a bit to figure this out). It's the largest one-quarter drop since 1982. A full 2 percent of that came from the decline in auto manufacturing. Consumer sales and investment also fell. Chair of the Council of Economic Advisors Christina Romer has this to say:
The large decline confirms the evidence from other indicators, such as payroll employment and the unemployment rate, that the U.S. economy continues to contract severely. Aggressive, well-designed fiscal stimulus is critical to reversing this severe decline and putting the economy on the road to recovery and improved long-run growth.Or we could have a fringe libertarian tell us to do nothing and see how far that takes us.
-- Tim FernholzThis post has been updated.
