The U.S. economy probably shrank in the fourth quarter more than previously estimated and the pace of firings accelerated last week, economists said before reports today.

Gross domestic product contracted at a 6.6 percent annual rate from October to December, the most since 1980, according to the median forecast in a Bloomberg News survey. The number of people claiming jobless benefits exceeded 600,000 for an eighth consecutive time, the Labor Department may report.

Recent reports show retail sales, residential construction and home sales have improved, indicating last quarter’s slump may give way to smaller declines in growth. A let-up in the recession would set the stage for Obama’s stimulus plan and Federal Reserve measures to take hold in the second half.

“The worst is probably behind us,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. “Hopefully, if policy works, we can actually start to see some daylight as we get to the middle of the year.”

The revised figures for GDP, the sum of all goods and services produced, are due at 8:30 a.m. in Washington. Commerce last month estimated the fourth-quarter’s contraction at 6.2 percent. Forecasts of the GDP decline ranged from 6 percent to 7.1 percent in a Bloomberg survey of 69 economists.

This is the final of three growth estimates the government issues. The world’s largest economy shrank at a 0.5 percent annual rate in last year’s third quarter.

Today’s report will also provide the first look at corporate profits last quarter.

Source: Bloomberg.com

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