Los Angeles Times

Los Angeles Times

WASHINGTON — The bad economic news keeps piling up.

On Thursday, three milestones showing the depths of the downturn were reached: The number of workers filing unemployment claims hit an all-time high, sales of new homes fell to an all-time low, and production of durable goods dropped for the fifth consecutive month, boosting inventories to their highest level since at least 1992.

And it’s not over yet. Today, the Commerce Department is scheduled to release its initial estimate of the U.S. gross domestic product — the value of all goods and services produced by the economy — for the fourth quarter of 2008. The report essentially will wrap into one sobering number all the grim developments that have been accumulating for weeks and months.

Many economists think the economic output declined in the quarter at an annual rate of 5 percent or more — which would make it the worst quarter for the U.S. economy since 1982.

“It will be bad,” said Nigel Gault, chief U.S. economist at IHS Global Insight, a forecasting company in Lexington, Mass. He estimated that the economy shrank at a 5.3 percent annual rate in the three months that ended Dec. 31.

Moreover, he added, Thursday’s data indicate that the current quarter “will be just as bad.”

“It’s going to confirm what we already know, and that is that we’re in a severe recession,” said Ben Herzon, senior economist with forecasting company Macroeconomic Advisers in St. Louis, who expects the report to show a decline of 5.5 percent.

President Barack Obama met Thursday with his economic advisers at the White House and pledged that his administration was working on a three-part plan to pull the economy out of the doldrums.

The plan includes the $819 billion fiscal-stimulus package under consideration in Congress, an effort to shore up the fragile financial system and a program to address the housing and foreclosure crisis, which helped trigger the recession that began about a year ago.

The stimulus plan is “only one leg of the stool,” Obama said after the Oval Office meeting. “These other legs of the stool will be rolled out systematically in the coming weeks so that the American people will have a clear sense of a comprehensive strategy designed to put people back to work, reopen businesses and get credit flowing again.”

The stock market tumbled on the grim economic data, giving back nearly all of the gains it made the day before. The Dow Jones industrial average slumped 226.44 points, or 2.7 percent, to 8,149.01. The broader Standard & Poor’s 500 index and Nasdaq composite index each gave up more than 3 percent. Financial stocks were the biggest losers.

On the job front, the Labor Department reported that the number of workers receiving unemployment benefits jumped 159,000 last week to 4.78 million, the most since the government began keeping records in 1967. As a proportion of the work force, which has grown substantially since the 1960s, the number of people on unemployment was the highest since 1983.

There was no sign of improvement in the housing market. The number of new homes sold in the U.S. plummeted 15 percent in November to a seasonally adjusted annual rate of 331,000, nearly half of the number a year earlier, the Census Bureau reported.

Based on that sales rate, it would take almost 13 months to eliminate the backlog of unsold new homes, suggesting that construction — already at a near standstill — is unlikely to pick up any time soon.

And orders for durable goods — big-ticket purchases such as automobiles and home appliances — dropped 2.6 percent. Excluding a huge increase in military purchasing, the drop was 4.9 percent. Inventories of durable goods rose to their highest level since the government began keeping track in 1992.

“It’s looking like it’s going to be the most severe recession since the Great Depression, or at least one of the most severe,” Herzon said.

Thursday brought another wave of layoff announcements from U.S. companies, reflecting mounting distress in many corners of the economy, especially manufacturing.

Cessna Aircraft Co., citing an increase in orders canceled or delayed, said it planned to lay off 2,000 workers. The company earlier had announced 2,600 job cuts.

Oshkosh Corp., a truck maker based in Wisconsin, said it would cut 1,050 jobs, bringing to 2,400 the number of jobs eliminated since last summer.

Slot-machine maker International Game Technology said it would lay off 200 workers, citing the effect of the recession on the casino industry. The Nevada company cut 500 jobs in November.

Eastman Kodak Co., which makes imaging and photography materials and equipment, said it will eliminate as many as 4,500 jobs, or about 18 percent of its work force, after reporting a fourth-quarter loss. Reflecting the turmoil in the financial services industry, OppenheimerFunds Inc. said it laid off 220 employees this week, or 9 percent of its work force.