Q4 GDP Shrinks by 3.8%

The economy posted its steepest decline in 27 years, shrinking by 3.8% in the last quarter of 2008.  Still, it was better than expected 5.4% drop.

The markets interpreted these news in an interesting way, deciding that a relatively mild decline in GDP signals that more drops are on the way, pushing the recovery further in the future.  I wonder whether the markets would have been happier if, for example, the GDP dropped 7% last quarter?  It seems that all kinds of news tend to be interpreted negatively these days.