Published: Jul 30, 2010 1:40 PM EDT
Updated: Jul 30, 2010 10:41 AM EDT

WASHINGTON (AP) - The recession was deeper than the government

previously thought.

The Commerce Department, in revisions issued Friday, estimates

the economy shrank 2.6 percent last year - the steepest drop since

1946. That's worse than the 2.4 percent decline originally

estimated.

The economy's plunge underscores why the unemployment rate

surged to 10.1 percent in October, a 26-year high.

The revisions in gross domestic product, or GDP, now show zero

growth in 2008. That compares with a 0.4 percent gain previously

estimated.The economy also grew less in 2007 (1.9 percent) than

earlier thought (2.1 percent).

For all three years, consumers spent less and home builders cut

more deeply than had been thought. Those factors help explain the

downward revisions on the economy.

The revisions also show that struggling state and local

governments cut spending more last year than previously thought.

And they spent less in 2007 and 2008.

The economy slid into its worst recession since the Great

Depression in late 2007. Many economists think the recession ended

last summer, although a panel of academics that dates the start and

end of recessions hasn't declared when this one ended. The panel

usually does so well after the fact.

From the start of the recession in December 2007 until the

April-to-June quarter of 2009, the economy sank 4.1 percent. That

was deeper than the 3.7 percent decline previously estimated for

the recession.

GDP is the broadest gauge of the economy's health. It measures

the value of all goods and services - from machinery to manicures -

produced in the United States.

The Commerce Department's latest revisions reach back to 2007.

They're based on more complete data and on methodology thought to

be more accurate.