Is the US heading for a depression?

By Steve Schifferes
Economics reporter, BBC News

The sharp contraction of the US economy accelerated in the last three months of 2008, with official figures showing GDP shrinking at an annualised rate of 3.8%.

With forecasters already predicting the worst US recession since World War II, how big a danger is there that the US economy will slip into a depression similar to the 1930s?

The latest figures paint a gloomy picture of the US economy.

Consumer spending, which makes up two-thirds of the economy, fell for the second quarter in a row, by 3.5%.

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