A steady stream of unfavorable news, continued uncertainty surrounding the health of the banking industry, and the lack of clarity about the government’s policy response to the economic and financial crisis translated into further losses for the equity markets in February. Revised data revealed fourth quarter GDP contracted by its largest amount in more than 25 years. The slowing U.S. economy continued to shed jobs as employers trim their payrolls to cut costs. New home sales, existing home sales and home prices all declined during the month. Consumer confidence fell to an all-time low. For the month of February, the Dow Jones Industrial Average returned -11.24%, the S&P 500 returned -10.65% and the MSCI ACWI Ex-US returned -9.33%.

• Revised data showed that real GDP declined at an annualized rate of 6.2% in the fourth quarter of 2008. This contraction of the U.S. economy was the worst quarterly performance since the 1982 recession.

• Employment concerns remain a factor as the U.S. economy shed 598,000 jobs in January and the unemployment rate rose to 7.6%, which is its highest level since 1992.

• New home sales plummeted 10.2% to an annual pace of 309,000 — the lowest reading since the series began in 1963. Sales of existing single-family homes and condominiums declined by 5.3% in January to 4.49 million annualized units. Construction of single-family homes fell 12% to 347,000 annualized units, which was the lowest level ever recorded going back to 1958. Building permits, which are a leading indicator of future construction activity, declined by 4.8% during the month. U.S. home prices declined by 18.5% in December from year-ago levels according to the Case-Shiller 20-city composite.

• The Conference Board’s Consumer Confidence Index declined from 37.7 in January to 25 in February, reaching an all-time low (the Index began in 1967). Increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever. 

• Consumers also felt a slight pinch to the pocketbooks as the price of gasoline and other products have risen slightly. The Consumer Price Index (CPI) rose 0.3% as the price of gasoline rebounded after declining for five straight months. The core CPI Index, which excludes food and energy, rose 0.2% during the month.

• Manufacturers continue to suffer as industrial production tumbled 1.8% as the contraction in the manufacturing sector deepened. New orders for non-defense capital goods excluding aircraft, a leading indicator of business investment, declined by 5.4%.