As the housing market freefall deepened in the last quarter and the subprime crisis emerged to the surface in August of last year, the US economy took a doomed U-Turn into recession, and so far there is no light seen at the end of the tunnel. The Feds since then have slashed a total of 3.0% of their benchmark to now at 2.25% and still seemingly we are heading to contraction ending a six-year expansion phase.

The final GDP reading today was widely expected to be unrevised, yet interesting numbers were out for us to digest within inner component revisions. Business have decreased further their inventories yet still they subtracted 1.8% from the GDP, which will be taken as good sign when the economy picks pace as they need more capacity to rebuild, yet now we are in the current dilemma to foresee the future!

Consumers which account for the largest share in the GDP of around 70% had increased by 2.35 revised from the preliminary estimate of 1.9%, yet remains below the previous quarter's seen pace of 2.8%, contributing by that with a total of 1.58 percentage points to the GDP. Durables purchases were revised lower while services were higher with 2.0% and 2.8% respectively.

Now the depreciating dollar, which has yet fell further more to record lows in the first three-months of this year, had helped exports contribute well to the GDP; trade added 1.02% from the previous estimate of 0.90%. Well surely it is the time to at least benefit from the downturn to help dent those expanding trade and current account deficits the US is running, which might in role keep some support for the industrial sectors which still in the first quarter have been performing much poorly than anticipated. If we take a desperate measure to look at the GDP excluding the boost from exports we would see the economy had contracted 0.4 percent!!!

The housing market slump was and still is the cavity that has tarnished the rest of the sectors, as it eliminated 1.25% off the GDP and still counting! The spreading damage is detectible on all sectors now and reading on the first quarter contributors have certainly deteriorated much since those last three months now under scope.

The first release into corporate profits clearly helps, as the profits for current production, after adjusting for the value of inventories and depreciation we find that they dropped 3.3% for the second consecutive drop. Making the entire profits for the year just 2.7 percent, which marks the slowest pace since the economy was in its last recession back in 2001.

Seemingly, the Feds are drowning in agony as they are at arms length to salvage what is left of their economy, yet the question remains within markets, is there ANYTHING LEFT? Well as once feared inflation from a depreciating dollar and rising commodities from food to energy will cripple policy makers from slashing those rates; well we need to rethink that preposition. The Feds favorite measure for inflation the Core PCE was actually revised lower to 2.5% from 2.7% and that was in the third quarter when personal expenditure was actually much stronger than the meantime!

The weakening labor market is surely dampening spending capabilities, after the nonfarm payrolls in January and February showed that the economy has actually lost jobs more than it added is a clear indication. The Labor department at that matter said today that first time filed claims fell 9000 to 366,000 in the week ending March 22 from a revised 375,000 the previous week; the four-week average is now at 358 thousand higher 1,750 while counting claims fell 5000 to 2.85 million, yet still this week is considered volatile as the index is always known to be so since we have had the Easter Holiday and for that revisions might follow next week ahead of March employment report.

Basically, the scenario is as follows, the US is in deep economic hurdles, if since the fourth quarter the contraction was an option and only trade was the savior, then basically as we look at 2008 figures we see export orders also falling, durables slumping, services are crippled by the Financial Sector with writedowns all across and the housing contraction will have deepened its depressing from the GDP; for that as I see it, not highly unlikely, though actually more of a probability for us to see clear contraction in the economy in the first quarter GDP and if you think we are heading to recession, just ponder a bit and you'll see we already ARE IN RECESSION!