The nation's economic growth declined 2.1 percent in the fourth quarter of last year, the first drop in nearly five years and the largest decline since the 1982 recession, the Commerce Department reported Friday.
An administration official blamed the decline on uncertainties surrounding the Persian Gulf crisis and said White House forecasts call for a "short and shallow" recession ending by midyear."The Persian Gulf crisis took its toll on the nation's economy at year-end," said Michael Darby, the Commerce Department's undersecretary for economic affairs.
Darby said the report supports a "short and shallow recession," and noted the assumption "assumes no disasters from the war."
The report raised the likelihood of recession, which is generally defined as two consecutive quarters of negative growth. The government said the report is based on incomplete data and is subject to revision.
Many economists, however, expect the final GNP numbers to be negative and forecast the same for the first quarter of this year.
"This is all consistent with the original view of a short and shallow recession. We are likely to see another downward quarter but it by no means is a certainty," said Robert Dederick, chief economist at the Northern Trust Co., in Chicago.
Dederick said the first quarter, barring any unexpected reversals in the progress of the war, is likely to be weak, but should be an improvement over the fourth quarter.
"The fastest rate of decline is behind us," he said.
Darby said the economy should post "strong and positive" growth during the second half of the year.
Weak consumer confidence contributed to the $22.5 billion decline in GNP during the fourth quarter, which followed a 1.4 percent, or $14.9 billion, third-quarter gain.
For the year as a whole, real GNP increased 0.9 percent after rising 2.5 percent the year before.