Friday, December 12, 2008

Race to the bottom

Fri Dec 12, 2008 7:30pm GMT

Merrill Lynch Friday cut its operating earnings for the S&P 500 .SPX to $58 from $60 after the release of November retail data, which was negative for the fifth month in a row, the first "five-dive on record," the firm said.

"Over this July-November period, retail sales have slumped at a 7.4% annual rate, which is also unprecedented. We can safely say that this is turning out to be the worst consumer downturn since the Great Depression," it added.

Merrill said the data suggested a decline of 6.3 percent in real fourth-quarter GDP, compared with its previous estimate of a drop of 4.5 percent.

"The sagging momentum looks to be carrying over into early next year. So, first-quarter real GDP looks set to contract at a 4.5% annual rate. This would put our estimate of real GDP for all of 2009 at minus 3%, which would be the worst year for the economy since 1946," it said.

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