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Consumer Spending Nosedives in Q4

The U.S. Commerce Department reported last week that “real gross domestic purchases,” a major component of the Gross Domestic Product, fell by 5.6% in the fourth quarter of 2008, compared to a 1.5% decrease in the third quarter. The data was part of the preliminary tally of the GDP for the fourth quarter, which Commerce said decreased at a 6.2% annual rate — stunning many economists who had projected a less steep decline; reports indicated this was the sharpest quarter-to-quarter fall in more than 25 years.

In related components, Commerce said Q4 “real personal consumption expenditures” fell 4.3%, following a 3.8% decrease in Q3; and imports of goods and services decreased 16.0%, following a 3.5% decrease in Q3.

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