Man, it's ugly. The 0.3 percent annualized drop might not seem so bad, especially since the consensus forecast had been a decline of 0.5 percent. But keep in mind that there will be more revisions in the next month or two as additional data comes in. What’s clear, even by looking at the preliminary numbers, is that consumer spending fell like a rock. Bloomberg reports that the 6.4 percent rate of decline in spending on non-durable goods, stuff like clothing and food, was the biggest since 1950. And the fourth quarter is certain to be a lot worse, considering that the financial crisis didn't really kick in until late September. Floyd Norris says the recession is already deeper than the 2001 downturn.

The year-over-year increase in real G.D.P. is 0.8 percent, the lowest for any four-quarter period since 2001. Real personal consumption spending is estimated to have fallen a tiny bit (0.04 percent) over the four-quarter period. That is the first decline for that segment since 1991.

[CUT]

With consumers fearful, what kept the overall quarterly decline so small? Government spending, for one. It added 1.1 percent to the growth rate. Another 0.6 percent came from increases in private inventories, which probably represents items that were not sold because customers were not buying.