WASHINGTON — The recession was deeper than the government previously thought.
The Commerce Department, in revisions issued Friday, estimates the economy shrank 2.6 percent last year — the steepest drop since 1946. That’s worse than the 2.4 percent decline originally estimated.
The economy’s plunge underscores why the unemployment rate surged to 10.1 percent in October, a 26-year high.
The revisions in gross domestic product, or GDP, now show zero growth in 2008. That compares with a 0.4 percent gain previously estimated.The economy also grew less in 2007 (1.9 percent) than earlier thought (2.1 percent).
For all three years, consumers spent less and home builders cut more deeply than had been thought. Those factors help explain the downward revisions on the economy.