WASHINGTON - The nation's gross domestic product, the broadest measure of economic health, declined at an annual rate of 0.5 percent in the July-to-September quarter, and corporate profit fell for the third time in the last four quarters, the government reported yesterday.
While the GDP drop was relatively modest, some economists say they believe the economy's decline in the October-to-December period will be as large as 6 percent. If so, that would be the worst quarterly drop since 1982.
"It will get a lot worse before it gets better," said Nariman Behravesh, chief economist at forecasting firm IHS Global Insight Inc., of Lexington, Mass. "We are in the midst of the worst recession in the postwar period, even factoring in a massive stimulus program."
The recession began a year ago this month.
The GDP is likely falling at a sharper pace in the current quarter because of widening fallout from the worst financial crisis to hit the country since the Great Depression. If the GDP did plunge as much as 6 percent in the fourth quarter, it would be the sharpest quarterly decline since a 6.4 percent drop in the first quarter of 1982.
The GDP measures the value of all goods and services produced within the United States. Many economists say they believe this quarter could mark the low point of the recession, which already is the longest in a quarter-century.
Analysts are projecting that the huge plunge in GDP they expect in the current quarter will be followed by smaller declines in the first and second quarters of next year, before the economy starts growing again during the summer.
The 0.5 percent drop in GDP during the third quarter followed a 2.8 percent increase in the spring, a period that was boosted by the distribution of millions of economic-stimulus payments.
President-elect Barack Obama favors a massive second stimulus measure of about $850 billion, which Obama is pushing Congress to pass early next year to limit the severity of the downturn.
The GDP report indicated that spending by consumers plunged at an annual rate of 3.8 percent, the biggest decline since 1980. Consumer spending is key because it accounts for two-thirds of economic activity.
The 0.5 percent fall in after-tax corporate profits followed a 5.4 percent drop in the spring.