WASHINGTON — The nation’s economy shrank slightly at the end of 2007 and expanded at a weaker-than-expected 1.9 percent annual pace during the past three months, despite tax rebate checks aimed at propping up growth, the Commerce Department said Thursday.
“The basic pattern is clear. This is becoming a W-shaped recession,” said David Wyss, chief economist for Standard & Poor’s in New York.
The contraction evident in the fourth quarter of 2007, when the GDP fell at a 0.2 percent rate, “got interrupted by the rebate checks,” Wyss added, but the economy “will go back to declining after people finish spending their checks.”
Many economists had predicted the economy would grow 2.3 percent during the April-through-June quarter because Washington was pumping out $100 billion in rebate checks.
Although the checks did have an effect, raising the pace of growth from its January-through-March rate of 0.9 percent, analysts said the pickup is not likely to be enough to keep the country from a renewed slump later in 2008.
There were some glimmers of hope in the new growth figures. Home building, which shrank at better than a 20 percent annual pace late last year and early this year, skidded at only a 15.6 percent rate in the latest quarter.
Meanwhile, the nation’s exports grew at a sizzling 9 percent pace as imports fell. The result was that trade contributed more to U.S. economic growth than at any time since 1980.
“Whatever strength there was came from the tax rebates, from exports and from strong federal government spending,” said Allen Sinai, chief economist at Decision Economics Inc. in New York.
