Fourth Quarter 2008 … The Worst Ever?

I have been so distracted by the various bailout plans littering Washington and the emerging budget struggles that I have forgotten to keep score on the actual economy. Since the latest and final revision to the fourth quarter data is now available let’s take stock.

It was awful.

Possibly the worst quarter on record. Or at least since the Great Depression. This truly is shaping up as ‘The Great Recession’.

So let’s tally the carnage [courtesy of MarketWatch.com]:

GDP fell at an annualized 6.3% rate in the fourth quarter. The worst since 1982, and the third worst ever.

Gross income fell at a 7.6% rate. The worst performance since 1980, and the second worst since the 1940’s.

Corporate profits were a disaster. Not even counting the losses at banks, profits fell at 16.6% rate, the worst performance since 1953.

Personal disposable incomes fell 2.3%, but ironically the collapse of the economy brought prices down so fast that purchasing power actually rose. Having said that household wealth was hammered: it dropped by over $5 trillion in the fourth quarter, which is twice the previous worst rate of decline.

Job losses were horrendous: 1.28 million jobs lost in one quarter. This is unprecedented. the only worse figure came right at the end of World War II when industry was slimming down from the war effort.

Finally housing painted an ugly picture too: 11% of all mortgages were either in foreclosure or were at least one payment behind.

So, while each of these statistics may not be the worst ever, no quarter has seen such a terrible combination. That’s what makes this recession so awful: every sector is affected. Every statistic has tested the record books. Grim is an understatement. The toll on regular folks has been incredible. So the anger and populist backlash against those high paid AIG traders is entirely and easily explained: there’s real hardship and hunger out there on a level unseen since the 1930’s.

The fourth quarter of 2008 may just have been the worst quarter the economy has ever experienced.

But let’s look on the bright side: the first quarter of 2009 must surely have seen an improvement. Let’s hope so!