Recession Was Deeper Than Previously Thought

(CBS/AP)  Updated at 6:33 p.m. ET

U.S. gross domestic product increased at an annual rate of 2.4 percent in the second quarter of this year. That lackluster performance was less than the 2.5 percent .

The report Friday is confirming investors' belief that the economic recovery is weakening as unemployment remains high and government stimulus programs end.

But also found in the latest government figures is that the recession was deeper than previously thought.

The Commerce Department's Bureau of Economic Analysis, in revisions issued Friday, estimates the economy shrank 2.6 percent last year - the steepest drop since 1946.

That's worse than the 2.4 percent decline originally estimated.

The economy will need to pick up to speed to create jobs, CBS News Correspondent Anthony Mason reports. At the 2.5 percent growth rate most economists are forecasting for the rest of the year, unemployment will remain right where it is.

The economy's plunge underscores why the unemployment rate surged to 10.1 percent in October, a 26-year high.

The revisions in gross domestic product, or GDP, now show zero growth in 2008. That compares with a 0.4 percent gain previously estimated. The economy also grew less in 2007 (1.9 percent) than earlier thought (2.1 percent).

For all three years, consumers spent less and home builders cut more deeply than had been thought. Those factors help explain the downward revisions on the economy.

The revisions also show that struggling state and local governments cut spending more last year than previously thought, and they spent less in 2007 and 2008.

GDP: 2nd Qtr 2010, Revised 2007-1st Qtr 2010

The economy slid into its worst recession since the Great Depression in late 2007. Many economists think the recession ended last summer, although a panel of academics that dates the start and end of recessions hasn't declared when this one ended. The panel usually does so well after the fact.

From the start of the recession in December 2007 until the April-to-June quarter of 2009, the economy sank 4.1 percent. That was deeper than the 3.7 percent decline previously estimated for the recession.

GDP is the broadest gauge of the economy's health. It measures the value of all goods and services - from machinery to manicures - produced in the United States.

The Commerce Department's latest revisions reach back to 2007. They're based on more complete data and on methodology thought to be more accurate.

[thy-only_king]

Recession Was Deeper Than Previously Thought

================= CORRECTION =================

Obama Is Doing More Damage Previously Thought

[LtSmily]

Does this surprise anyone? Business does not know the what, where, or how Obama will pull the rug out next. There is no recovery yet, and the economy is going "down" because government stimulus money is gone. How many Administration economists does it take to screw in a light bulb, or America for that matter. Look at just one SINGLE piece of legislation this Administration passed that the American People did not want. Remember HealthCare and Obama's new Czar, Donald Berwick, who touts the NHS of great Britain as the end all for all healthcare cost concerns, well, here is a snippet of what Britain is doing today:

"Practical details of the plan are still sketchy. But its aim is clear, says the New York Times:

* To shift control of England's $160 billion annual health budget from a centralized bureaucracy to doctors at the local level.
* Under the plan, $100 billion to $125 billion a year would be meted out to general practitioners, who would use the money to buy services from hospitals and other health care providers.
* The plan would also shrink the bureaucratic apparatus, in keeping with the government's goal to obtain $30 billion in "efficiency savings" in the health budget by 2014 and to reduce administrative costs by 45 percent.
* Tens of thousands of jobs would be lost because layers of bureaucracy would be abolished. "

AND

"The health secretary, Andrew Lansley, also promised to put more power in the hands of patients:

* Currently, how and where patients are treated, and by whom, is largely determined by decisions made by 150 entities known as primary care trusts -- all of which would be abolished under the plan, with some of those choices going to patients.
* It would also abolish many current government-set targets, like limits on how long patients have to wait for treatment.

WOW, killing the centralized bureaucracy is going to cut costs? Tens of thousands of jobs will be lost. Oh no, where are these jobs? Government sector jobs. The jobs that don't produce any benefits what so ever for Britain's economy. The same type of jobs that were supposedly "saved or created" by our current administration. I wonder... who pays those government salaries? Oh yea, the tax payers do. Where do tax payers get their salaries? Oh yea, the Private sector. Ask yourself this, if you are a government employee, and your paycheck is funded by taxpayers, and your own government paycheck gets taxed by by your employer (the Government), is that double dipping? Why don't we have the Queen (God Save the Queen) call Obama and explain to him that centralized government healthcare has been tried since 1948, and it only took 62 years to figure out it's a complete and utter failure. Keep Washington in Washington, and let the rest of the Country do what it needs to do to recover. The best medicine right now for a recovery is for Washington to just stop doing anything at all for awhile. My apologies for the length of article.

[smitvict]

I wonder if he will travel to the South and give a speech at an automobile manufacturing plant there - in a right to work state. The reason those plants are doing so well is that the unions poisoned their own well in Michigan.

[RobAla]

This President and the Democrat controlled Congress have done all of the wrong things to help pull out of a recession. They have made it worse.

Ever since he was elected, President Obama has expanded the federal government at the expense of business and the American taxpayers. The reason the recession is worse, is because he and progressive Democrats in Congress have made it so.

They passed the health care bill, over the objections of the majority of Americans. This horrible bill places addition burdens on businesses and American taxpayers at a time of high unemployment and economic recession. They plan to let the bush tax cuts expire, which will result in taking money out of the economy and pushing it into Washington. They pushed a cap and trade bill and climate related bills that are job killers. They refuse to secure the borders and to enforce federal immigration law, resulting in states and cities picking up huge tabs for people who are paid under the table (aren't taxed). They are responsible for a $1.47 trillion deficit this year, because of outrageous federal spending. Almost 20% of the nation?s budget goes to pay just the interest for the national debt. Granted, both Republicans and Democrats contributed to the national debt. However, the Democrats have exploded it like never before.

You can not enact fiscally irresponsible policy, and expect things to go well economically. This administration is doing all the wrong things economically, and we all are suffering for it. Recently, President Obama stated that he projects that 9% unemployment will remain into the year 2012. This is unacceptable. Instead of growing the government, he should be creating an environment where private business can begin hiring again. This is a disaster, and it has to stop.

[cjs_cnet_xyz]

Oh those crazy economists! Which one of you people told the economists that the recession was actually deeper than they originally thought? How were you able to communicate this to them? Communicating with the tone-deafness of these economists is a remarkable breakthrough. Come forward, we want to award you a peace prize for this!

[jgg000101]

Hey CBS, here's an alternate headline:

Stimulus Plan a Complete and Utter Failure.

[sjc_1]

We should expect to see a slowing of growth. This is REAL growth, not the no bid contract, sub prime bubble appearance of growth.

[jgg000101]

"This is REAL growth"? Are you insane? This is a freaken unmitigated disaster. Unemployment hasn't budged. record numbers on foodstamps, unemployment benefits and welfare. record numbers of foreclosures. the lowest gdp growth since 1946. There is absolutely no way anyone, including you, can defend this.

[Shocktribe]

Come on Obama, throw another trillion non-existent dollars at the problem. But why even bother, hold a trillion dollar bonfire on the white house lawn. At least then we'll get to watch the spectacle of you burning through our money.

[jgg000101]

the private sector isn't investing in the economy BECAUSE of the government. Business doesn't know what their tax liability is going to be and they don't know how the healthcare bill is going to affect them.
Who do you think PAYS for the public sector????

[KeithDrippingSprings]

If the pretend Journalist would do a little research instead of reporting crap someone says they would know that they have been pimping for Wall Street and Obama for the last eighteen months. This is a Depression, it has been for a long time and it will be for much longer.

Reporting Growth at 2.5% is one example of stupid reporting. If so called growth continues at 2.5% for another year our unemployment will be 25% instead of the 18% it is now. The biggest difference between the Depression and our Recession is that in the 30's the government actually reported the true unemployment numbers. Of course they lied just like our Scoundrels and Thieves but they lied about different stuff.

[tquinn]

The Wall Street Journal has repeatedly reported that businesses are afraid to hire employees because of the Democratic initiatives on health care changes, general tax increases (expiration of Bush tax cuts), growth of government overall, climate tax increases, and a general anti-business attitude by the current administration. If you were a business with all of this uncertainty, would you be hiring in the United States? Not if you were a good businessman.

It is disappointing, but not really surprising, that CBS News made no mention of this factor.

[KeithDrippingSprings]

tquinn - you are not paying attention. Business hires if they have some product to sell and they have customers. Government regulation does not stop hiring nor can government spending cause hiring. If it could we would all be working right now.

[Hadenoughuc]

that cuz they over pay themselves and give themselves big retirements, so they have there heads so far up there you know what they cant tell how the other people live.
we all been saying too many taxes to much work and not enough is given to the lower working people only the big CEO's well its finely hit an end the already rich need to start paying the people at the bottom so we have monies to spend to bring the economy back up. IT's just that simple.