US economy contracts 3.8%; BEST PAID PAPee's Leelaland?

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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>US economy contracts 3.8%
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->WASHINGTON: - The United States economy shrank at its fastest pace in nearly 27 years in the fourth quarter, government data showed yesterday, sinking deeper into recession as consumers and businesses cut spending.
In a report that showed a broad-based contraction across nearly all sectors, the Commerce Department said gross domestic product (GDP), which measures total goods and services output within US borders, plummeted at a 3.8 per cent annual rate. That was the biggest drop since the first quarter of 1982, when output contracted 6.4 per cent, and highlighted that the housing-led slump, which started in December 2007, was gathering momentum.
The contraction in the final three months of last year was less than forecast, with a build-up of unsold goods cushioning the blow. Without the jump in inventories, the decline would have been 5.1 per cent, the Commerce Department said.
Economists had forecast a worse fourth-quarter performance - a staggering 5.4 per cent rate of decline - but the results were still grim.
The report gave evidence of the economy's rapid deterioration as the housing, credit and financial crises - the worst since the 1930s - feed on one another. It is a vicious cycle that has proven difficult for Washington policymakers to break.
Analysts said the depth of the economic decline in the fourth quarter could have been masked by the US$6.2 billion (S$9.3 billion) build-up in inventories.
'I think the numbers are weaker than what the better-than-expected headline reading suggests because the miss was mainly in what could have been an involuntary increase in inventories,' said analyst Dana Saporta at Dresdner Kleinwort in New York.
'Because inventories rose in the fourth quarter, we're expecting a bigger drop than otherwise in the first quarter of 2009 - a bigger drop in inventories and probably a bigger drop in GDP than otherwise.'
The economy is likely to contract further, after retailers and manufacturers from Starbucks to Boeing this week announced plans to slash payrolls and cut production to get rid of unwanted goods.
Last year, GDP rose 1.3 per cent, the slowest pace of growth since 2001, when the economy expanded 0.8 per cent. REUTERS, ASSOCIATED PRESS, BLOOMBERG

 

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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->TOKYO: - Japan yesterday announced a triple dose of grim economic news, with factory output falling at a record pace, unemployment shooting up and consumer spending plunging, and said there was no end in sight to the bad news.
Industrial production at the nation's manufacturers plunged 9.6per cent last month, the largest drop since Tokyo began measuring such data in 1953, the government said.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>Profits down, jobs gone

NEC Corp, Japan's largest personal computer maker, said yesterday it will eliminate more than 20,000 jobs - the biggest cuts announced by an Asian company so far.

NEC also forecast a net loss of 290 billion yen (S$4.8 billion) in the 12 months ending March 31. The job cuts include those announced earlier this week by NEC Tokin Corp (9,450 jobs) and NEC Electronics (1,200 temporary employees).

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</TD></TR></TBODY></TABLE>Manufacturers said they expected the trend to continue, with output expected to tumble 9.1per cent this month and a further 4.7per cent next month.
'The problem is very serious,' Economics Minister Kaoru Yosano said. 'As to when the economy will bottom out, it is impossible to predict at this time as the problem is not only domestic but global.'
Analysts say Japan's economy now looks set to log its worst quarter since the oil crisis in 1974.
News of the global slowdown was no surprise to Japanese companies, which announced a raft of gloomy earnings data and massive job cuts yesterday that underline the severity of the crisis facing Asia's largest economy.
The worldwide economic slowdown is crushing demand for Japanese goods, raising fears that Japan suffered its sharpest contraction in three decades in the fourth quarter of last year.
By next month, output is set to drop to levels last seen in 1983, Macquarie Securities economist Richard Jerram said.
'Output will have fallen over a five-month period by as much as it rose in the previous quarter of a century,' he said.
Unemployment meanwhile jumped to 4.4per cent last month from 3.9per cent in November - the biggest jump in the unemployment rate in 41 years - as sliding corporate profits prompted a wave of layoffs. There were 2.7million people without jobs last month, an increase of 390,000, or 16.9per cent, from a year earlier.
Household spending tumbled 4.6per cent last month from a year earlier as consumers tightened their belts.
The current global economic crisis has battered demand for Japanese cars, electronics and other goods, pushing exports down a record 35per cent last month.
The International Monetary Fund said this week that Japan's gross domestic product will shrink 2.6per cent this year, the bleakest projection for any Group of Seven economy except the UK. That contraction would be Japan's worst since World War II.
'Japan's economy is falling off a cliff,' said economist Junko Nishioka, of RBS Securities Japan. 'There's really nothing out there to drive growth.'
Parliamentary gridlock has stymied the ruling Liberal Democratic Party's efforts to pass a 10trillion yen (S$166 million) stimulus package. The Bank of Japan, which last month lowered interest rates to 0.1per cent, has little room to counter the slump other than by purchasing corporate debt to ease a credit squeeze, which it started to do yesterday.
'In Japan, the political problems and the gridlock that they've got means they are totally unable to stimulate the economy,' said economist Tehmina Khan, of Capital Economics in London.
The latest government figures also show that inflation almost evaporated last month, as energy prices cooled and domestic demand weakened, raising fears of deflation. Core consumer prices rose 0.2per cent last month from a year earlier, compared with a 1per cent increase in November.
Bank of Japan Governor Masaaki Shirakawa has reiterated that the country is not currently at risk of falling into a deflationary spiral.
But Goldman Sachs economist Chiwoong Lee wrote: 'The economy is worsening too rapidly for us to completely rule out the possibility of a deflationary spiral.' AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS