Unsold Goods Piling Up As U.S. Spending Contracts

We're melting: The economy shrank at an accelerating pace late last year, the government reported on Friday, adding to the urgency of a stimulus pa

We're melting:

The economy shrank at an accelerating pace late last year, the government reported on Friday, adding to the urgency of a stimulus package capable of bringing the country back from a recession that has only deepened since then.

The actual decline in the gross domestic product — at a 3.8 percent annual rate — fell short of the 5 to 6 percent that most economists had expected for the fourth quarter. But that was because consumption collapsed so quickly that goods piled up in inventory, unsold but counted as part of the nation’s output.

“The drop in spending was so fast, so rapid, that production could not be cut fast enough,” said Nigel Gault, chief domestic economist at HIS Global Insight. "That is happening now, and the contraction in the current quarter, as a result, will probably exceed 5 percent."

The dismal result, and the likelihood of more of the same through the spring, are fueling discussion among policymakers and politicians over the best way to spend the soon-to-be-authorized federal money.

About Susie Madrak

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