Here's Barry Ritholtz's take:
GDP was negative in Q3 -- worst quarter since Q3 2001 -- and the headline number doesn't even do the extent of the contraction justice:
"Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 0.3 percent in the third quarter of 2008, (that is, from the second quarter to the third quarter), according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.8 percent.
The decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were largely offset by positive contributions from federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased."
Thank goodness for Federal, State and Local government spending, and for exports:
Real personal consumption expenditures: -3.1%Durable goods -14.1% Nondurable goods -6.4% Services expenditures +0.6%
And from Bloomberg:
``The crisis really kicked up in late September,'' Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York, said in a Bloomberg Television interview. ``We're going to be looking at a very unfriendly GDP number in the fourth quarter, with a drop of 2 to 4 percent.''
The worst of the news is consumer spending. Again, from Bloomberg:
Consumer spending dropped at a 3.1 percent annual pace, the first decline since 1991 and the biggest since 1980, after President Jimmy Carter imposed credit controls. The median forecast was for a 2.4 percent drop.
Worst Since 1950
The 6.4 percent rate of decline in spending on non-durable goods, like clothing and food, was the biggest since 1950.