This morning the government released their first estimate for the Gross Domestic Product, or GDP, from the fourth quarter of 2008. At first glance the report doesn’t appear quite as bad as some first thought it would be, but one should be cautious to read too much into it. The initial advance 4th quarter GDP figure shows GDP falling by 3.8%. That is certainly a very poor number, in fact is the worst since 1982, but analysts had been projecting a drop of 5.5%. Having said that, the government is likely to revise the numbers in the future and that 3.8% may end up turning into 4% or more on the downside.

The worst news is that it is very likely that the first quarter GDP number for 2009 will be much worse than the fourth quarter in 2008. Inventory which helped hold the number up a little in late 2008 has had to be gotten rid of and companies are laying off workers at a faster pace now than they have at any other point in this recession. The writing is certainly on the wall for things to get worse instead of better with the next couple of GDP reports from the government.

Another thing for individuals and investors to remember is that these GDP figures are more backwards looking than most economic reports, so they mean less to the stock market and the current economic state. The monthly employment data as well as consumer confidence readings and retail sales numbers all do a better job of capturing a more recent snapshot of how things are in the American economy. In my opinion none of the numbers are as important as the employment report, because as long as companies are increasing the amount of layoffs the consumer won’t be in a good position to help the economy turnaround. The bottom line; watch the GDP number, but remember it is not a forward indicator at all.

First of all, Happy New Year to all of the Moola Mania readers out there. I sincerely hope that 2009 is a prosperous one for you and your family.

Now that the new year is just about here the main question on many minds is, will things get any better or will it be the same old ugly mess that is the American economy and stock market of 2008? Quite frankly 2008 has been absolutely miserable for the stock market with the broad S&P 500 finishing the year with losses of about 38%. One also has to remember that in late 2007 things were very ugly as well, so the market itself is down about 50% from its high set in October of 2007.

Not to be outdone by the stock market, the economic data points have just gotten uglier and uglier by the month in 2008. The job market is the worst in at least 30 years, and consumer confidence is sliding lower than it has ever been measured before. The credit markets have yet to become unfrozen and the housing market is showing no signs of improvement. The best thing that can be said about 2008 is that it is now over with and it is time to turn the page.

While it would be easy to simply see things from a 2008 standpoint, you would be much better off trying to give your savings and investment plans a whole new starting point in 2009. I understand that 2008 has probably set you back substantially, but sitting back and pouting about 2008 won’t get you anywhere now. The economy is still in a terrible slide and the stock market is still very uncertain, but you need to prepare yourself and your personal finances for 2009. Don’t look back on the mistakes that have been made with disgust, but rather use them to your advantage in the future. Bring in the new year with a wise financial plan for your personal savings and investments.