U.S. economy at nearly 27 years low

The U.S. economy measured by GDP contracted at an annual rate of 3.8 percent in the fourth quarter of 2008, according to the Commerce Department. The fourth quarter marks worst performance for U.S. economy in nearly 27 years, since 1982. The U.S. gross domestic product totaled $11.599 trillion in the fourth quarter, the government said.

If unwanted buildup of goods on store shelves is excluded, a clearer picture of the economy emerges, as economic output would have fallen by 5.1 percent. This is the weakest in 28 years.

Declines in consumer and business spending were offset by inventories and government spending. The trade sector made a small positive contribution to growth as a sharp drop in imports was larger than the decline in exports.

Consumer spending, considered an engine of economic growth, fell 3.5 percent in the fourth quarter, as opposed to a 3.8 percent drop in the third quarter.

The business cycle committee of the National Bureau of Economic Research said recession in the economy began in late 2007, but with this data, there are now officially two quarters of decline in GDP, the classic definition of a recession.

The economy has grown just 1.3 percent in the past year, the weakest growth rate since 2001.