By the end of March, the economy, as measured by GDP, will shrink another 4 percent on an annualized basis, estimates IHS Global Insight, an economic forecasting concern in Lexington, Mass. By the second quarter, the annualized rate of decline will slow to 1 percent, according to Global Insight. Then the economy will grow by 1 percent in the third quarter and by 2 to 3 percent in the final quarter of the year.
"You can't stop the economy from contracting in a big way in early 2009," says Nariman Behravesh, chief economist at IHS Global Insight.
Few areas in the US will escape the downdraft, says Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pa. "It will be touching every industry, every occupation, every corner of the nation."
For example, Moody's now estimates that the economies of 33 states are in recession, with most of the others close to shrinking as well. Less than 22 percent of the nation's metropolitan areas are experiencing job growth, says Mr. Zandi. "That's the smallest percentage since 1975 and I wouldn't be surprised if it falls to a new low in the months ahead," he writes in an e-mail.
The shrinking economy means that unemployment will continue to rise through most of 2009 even if the economy shows a modest gain by year-end. The unemployment rate, currently 6.7 percent, could rise to 8 to 9 percent of the workforce. From peak to trough, Zandi estimates the economy will shed 5 million jobs, mostly likely the worst performance ever.