A winter of discontent

Some say the world will end in fire,
Some say in ice.
From what I've tasted of desire
I hold with those who favor fire.
But if it had to perish twice,
I think I know enough of hate
To say that for destruction ice
Is also great
And would suffice.
- Robert Frost

There was little in this morning's revision to the fourth quarter GDP estimate to warm the soul. Estimates of annualized economic growth were reduced sharply from the previous of -3.8% to the new estimate of -6.2% making it the fourth worst quarter for growth since WWII. To find worse, you would have to go all the way back to the first quarter of 1982 (-6.6%), the second quarter of 1980 (-8.1%) or the first quarter of 1958 (-10.9%).

The decisive factors in the lowered estimate were downward revisions in inventories, gasoline purchases and exports. I could attempt to put a favorable spin on these revisions. After all, the decline in inventories is good for future growth prospects since that means there is less of a potential overhang of last year's goods to work through. Also, the decline in gasoline sales is mainly a reflection of the dramatic drop in gasoline prices. But no matter how you cut it, the contraction was dramatic and ugly.