GDP Shows Steepest Drop in 27 YearsThe country's gross domestic product, its broadest economic indicator, showed its largest drop in the last quarter of 2008, shrinking by 3.8 percent, according to government's GDP report. This is the biggest slowdown since 1982, when the economy saw a 6.4 percent decline.
One positive note is the drop was less than economists had predicted. Earlier forecasts by economists saw the economy shrinking by 5.4 percent. The third quarter posted only a 0.5 percent decline. Consumers tightened their spending because of increasing job losses and decreased credit availability, which is attributed to the decline in GDP as consumer spending makes up about 65 percent of the country's economic activity.
New Home Sales Drop 14.7 Percent In December
The worst sales in 20 years in the homebuilding industry were capped in December with sales of new homes dropping 14.7 percent, the slowest monthly pace since 1963. The Commerce Department on Thursday reported new home sales fell in December to a seasonally adjusted annual rate of 331,000, down from November's 388,000 numbers.
Economists had expected sales to fall to a rate of 400,000 homes. In 2008, builders sold 482,000, the lowest results since 1982, when only 412,000 homes were sold.
Wall Street Execs Slammed On Bonuses
President Barack Obama slammed Wall Street executives for taking big bonuses at a time when the country's financial system is teetering on the edge of failure. Obama's comments "that is the height of irresponsibility. It is shameful," comes after the New York City comptroller reported Wall Street firms paid out $18.4 billion in bonuses in 2008.
Obama, his vice president Joe Biden and chief spokesman showed their outrage after the comptroller's report was issued, saying it was not the time to pay out bonuses when taxpayers are funding the $700 billion bailout. They expressed concern that news of this behavior will hinder efforts to stabilize the country's financial system when the public taxpayers read about these bonuses being paid out.
Obama says he's sending a message to Wall Street that there will be a time for them to make profits and there will be time for them to get bonuses. "Now is not that time." Obama has been putting more pressure on Wall Street since coming into office nine days ago to change their glitz and glamour behaviors during the down economy.
His statements come after it was revealed former Merrill Lynch CEO John Thain spent $1.2 million fixing up his office last year, including $35,115 on bathroom fixtures and $1,405 for a trash bin. Thain says he planned to reimburse Bank of America, and called the spending a mistake. Thain left Bank of America last week.
Earlier this week Citigroup dropped plans to buy a $50 million executive jet after the White House said it wasn't the best use of money by a bank getting taxpayer money. Both Bank of America and Citigroup have received massive government injections of money from the $700 billion bailout.
Auto executives also learned that excess doesn't sit well in the current economic hard times after arriving by private jets to plead with Washington lawmakers for bailout money for their troubled car companies. Lawmakers chastised all three, who subsequently drove cars to later hearings with lawmakers in the capital.