US output fell 3.8 percent at the end of 2008, but exports slid at a 20 percent rate.
SOURCES: US Bureau of Economic Analysis, National Bureau of Economic Research, Bloomberg /© 2009 MCT
If you wonder why the machinery maker Caterpillar is laying off more than 20,000 workers, the answer comes through loud and clear in the latest numbers on America's economy.
As the nation's production of goods and services fell at a 3.8 percent annual pace in the final quarter of 2008, one of the steepest parts of the slide was in exports.
The global economic downturn means that Caterpillar, which not many months ago was one of corporate America's big stories of industrial success, is selling a lot fewer excavators and pipe layers.
For years, US exports grew faster than other parts of the gross domestic product (GDP). But in the most recent quarter, exports fell much faster than the rest of the economy, declining at a 20 percent annual pace.
It's a sign of how a recession that began with trouble in American mortgages has gone global, and now that global impact is bouncing back at the US.
The IMF has revised its outlook for the world economy downward, with many nations facing even harder times than the United States. It now expects GDP to decline for the year by 1.6 percent in the US, 2 percent in the European Union, and 2.6 percent in Japan.
Disruptions in credit markets are hurting not just household spending but also the ability of companies to produce and ship goods, the IMF said in its new forecast.
Help for the middle class
President Obama focused on the economy's troubles on Friday, when the American GDP numbers came out, and in his radio address Saturday. First, he unveiled a task force to focus on strengthening the middle class and urged quick passage of his economic stimulus plan.