Shocking drop in fourth quarter GDP sends markets lower and undermines Obama budget contentions

The economy in the fourth quarter performed at a shockingly weaker pace than previously predicted, making President Obama's budget contentions to reduce deficit spending much less credible.

The New York Times reported:

Output fell 6.2 percent at an annualized rate in the fourth quarter of 2008, revised downward from a previous estimate of a 3.8 percent decline. The drop was even steeper than many economists had feared, and was much lower than the 0.5 percent contraction from the previous quarter.

The announcement comes on the heels of a new budget from the Obama administration that assumes what some economists have called an unrealistically optimistic view of the near-term future of the American economy.