Q4 GDP Shrinks by 3.8%

January 31, 2009 at 12:58 am Leave a comment

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.

Entry filed under: Market Conditions.

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Leon Shirman's long-term investment philosophy is summarized in his book, “42 Rules for Sensible Investing”, also available from Amazon.


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