Huge Economic Downturn In Late 2007

Far exceeding expectations of what was already projected to be a big slowdown to 1.4 percent GPD growth in the fourth quarter of 2007, initial government estimates put the actual GDP growth at 0.6 percent for the last three months of 2007. Which is bad news, and the slowest growth since 2002.

As the Fed is meeting again today to try and figure out how much of an additional rate cut to lay on us, the news about the economy grinding down almost to a halt can't be a welcome turn for anyone. The Commerce Department is pointing at the housing slump as the major source of the troubles. That presents a big problem in and of itself, but there's also other things to consider. From the AFP article:

The government survey showed that real residential fixed investment, essentially new home construction, plummeted 23.9 percent, marking its biggest decrease since 1981.

The economy is weathering a two-year long housing slump with a glut of unsold homes weighing on the property market. Home prices in many states have also weakened in the past year.

Despite the slowdown in growth, inflation pressures continued to percolate, particularly as energy costs remain relatively high.

Obviously we have major market concerns that point towards recession, and yet costs are up and may not be coming down anytime soon. You can expect a strong response from the Fed today, and increased pressure on federal lawmakers to finalize some kind of stimulus package.