The Meltdown

The Economy's Real Contraction

The economic contraction of 3.8 percent in the fourth quarter of 2008 wasn’t as bad as the 5 or 6 percent most economists expected…except output was somewhat inflated by goods that were produced but not sold. Excluding the inventory adjustment, GDP fell 5.1 percent, which, according to The Wall Street Journal, “economists say more accurately reflects the nation's weakness.” The Dow, meanwhile, ended January down 8.8 percent—the worst opening month ever for the market and a bellwether for the year to come.