Barack Obama, elected U.S. president on Tuesday, takes office at a time when the U.S. economy is struggling, with many analysts warning of the potential for a deep, long recession.

The following is a look at recent economic data that underscore the economy’s fragile condition:

* U.S. gross domestic product shrank at a 0.3 percent annual rate in the third quarter, the sharpest contraction in seven years. A Reuters poll last month found that economists expect GDP to shrink for three straight quarters, which would be the longest period of contraction since 1974-75.

* U.S. employers have cut a total 760,000 jobs this year and the jobless rate hit a five-year high of 6.1 percent in September. Economists expect 200,000 more jobs were lost in October. Many analysts predict the unemployment rate will rise by a further percentage point or more over the course of the next year.

* The U.S. Treasury, which is ramping up government borrowing to fund efforts to rescue the financial system, said on Monday that a survey of 18 primary bond dealers showed a consensus for a $988 billion federal budget deficit for fiscal 2009, more than doubling the record $455 billion deficit in fiscal 2008, which ended Sept. 30.

* U.S. stock markets tumbled in October. The Standard & Poor’s 500 Index had its worst month since the October 1987 stock mark crash, while the Dow Jones industrial average logged its biggest monthly drop in a decade.

* Mass layoffs — involving 50 or more people — hit their highest level in eight years in September.

* Consumer spending, which fuels two-thirds of U.S. economic activity, fell by 0.3 percent in September, the first drop in two years. U.S. consumer confidence in October suffered its steepest monthly drop on records dating to 1952.

* Existing home prices fell 9 percent from a year ago in September to the lowest level since April 2004. Prices of new homes were down 9.1 percent to their lowest since September 2004.

* U.S. industrial production tumbled by 2.8 percent in September, the biggest drop since December 1974. A report on Monday showed factory activity fell last month to its lowest level in 26 years. U.S. auto sales plunged 32 percent in October to a 25-year low.

* About 85 percent of domestic banks tightened lending standards on commercial and industrial loans to large and middle-market firms over the past quarter, showing the credit crunch that set in a year ago is worsening.

* The Federal Reserve has cut benchmark interest rates to 1 percent from 5.25 percent in the last 13 months, and has pumped hundreds of billions of dollars into financial markets to try to get credit flowing again. So far, those efforts have had only limited success.

source: http://www.afxnews.com

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