Economic output in the United States shrank more than feared during the last quarter of 2008, raising new questions on the country's path to recovery.

On Friday, the U.S. Commerce Department revised its fourth-quarter gross domestic product reading downward, to a 6.2% drop. At the end of January, the government had initially reported a GDP contraction of 3.8%, but that figure was less severe than the 5.4% annualized contraction Wall Street had been predicting for the last three months of the year. (See "U.S. GDP: Less Ugly Than Feared.")

"It was a really lousy report, but we expected that," said David Wyss, chief economist at Standard and Poor's, "and it can be added to all the other really lousy reports we've had this week." (See "U.S.: Jobless Up, Factory Orders Down, Nobody's Home.")

Most of the revision came from inventories. "There was also a fairly significant downward revision in trade, particularly exports," Wyss said.

Friday's reading was the worst since the 6.4% drop in recorded the first quarter of 1982, when the country was suffering a severe recession. This time around, the U.S. economy has been sucked into a housing, credit and financial conflagration that led to widespread job losses and a massive pullback in spending. (See "Rebuilding Global Markets.")

The government also reported that personal consumption fell by 4.3%, which was also below the 3.7% drop anticipated by Wall Street.

Friday's report added insult to injury for the U.S. markets, which also had to had to also grapple with the news of Citigroup (nyse: C - news - people ) reaching a deal with the U.S. government, in which the Treasury would convert up to $25.0 billion in Citigroup preferred shares to common. (See "Citi Nears Rescue From Uncle Sam.")

U.S. stocks recovered from deep losses in late-morning trading, while the yield on the benchmark 10-year U.S. Treasury note rose to 3.02%, from 2.98% Thursday

Stop The Fear Epidemic

The media need to help foster innovation and entrepreneurship, not squash it.

Sramana Mitra

More By This Author

The first decade of the 21st century has brought us a series of major economic and geopolitical shocks: the dot-com bust, the Sept. 11 attacks on New York, the financial crisis led by the subprime meltdown, and just last week, a fresh bout of terrorist attacks in Mumbai that threatens to destabilize the very significant and growing economy of India.

The most worrisome implication of these successive events is that the world will tailspin into a fear psychosis and all the drivers of progress and prosperity--innovation, entrepreneurship, consumer confidence and reform--will get paralyzed.

I am writing this column on a long flight from San Francisco to Singapore. Among the various books I have read on this flight is Judy Estrin's new book, Closing The Innovation Gap. Estrin, chief executive of JLabs and an adviser on President-elect Barack Obama's transition team, is deeply concerned about this fear psychosis that threatens to stifle innovation. She believes that the "soup" that provides the basis of innovation is currently being poisoned. "The soup starts with some common ingredients, a set of human attitudes and beliefs that are so critical that I call them the five core values of innovation: questioning, risk-taking, openness, patience and trust," Estrin writes. (Here's an excerpt from her book.)

And yet, when the dominant psychological premise of society is fear, how can people access essential factors like openness, risk-taking and trust? Thus, it is of paramount importance right now for us to address the fear issue from taking over human ingenuity.

I've thought long and hard, and watched how the fear epidemic spreads. Just recently, a well-respected Silicon Valley venture capital firm, Sequoia Capital, released a PowerPoint presentation that spread like a plague through the Internet, faster than Obamamania. In it, the esteemed firm made a grand display of irresponsible leadership by circulating the same germs of fear that we desperately need to prevent from spreading.

What did the media do in response? Top bloggers, major business and technology publications and otherwise respectable journalists became willing carriers of the virus. They published the presentation on their blogs and Web sites, and discussed and echoed the very sentiments of negativity that oozed out of Sequoia's presentation.

This is an example of how the epidemic spreads. And this is exactly how the epidemic cannot be allowed to spread going forward. No matter what happens--however dire the world events become--we must not allow fear to rule us like this.

OMAHA, Nebraska (CNN) -- Nebraska officials said they're concerned about an apparent rush by parents to drop their teenage children off at hospitals before lawmakers change the state's troubled "safe haven" law.

Four children have been dropped off at Nebraska hospitals in the last two days.

The latest cases came on the eve of a special session of the Legislature on Friday to add an age limit to the law. On Thursday, a boy, 14, and his 17-year-old sister were dropped off at an Omaha hospital; the girl ran away from the hospital, officials said. A 5-year-old boy was left by his mother at a different hospital, officials said.

The day before, a father flew in from Miami, Florida, to leave his teenage son at a hospital, officials said.

"Please don't bring your teenager to Nebraska," Gov. Dave Heineman told CNN. "Think of what you are saying. You are saying you no longer support them. You no longer love them." Watch as lawmakers convene to change law »

Nebraska's safe haven law was intended to allow parents to hand over an infant anonymously to a hospital without being prosecuted. Of the 34 children who have been dropped off at hospitals, officials said not one has been an infant.

All but six have been older than 10, according to a Nebraska Department of Health and Human Services analysis.

State officials said because of legislative procedures it will take at least a week to change the language of the safe haven law, creating a window where more parents could try to take advantage of the loophole in the statute.

"We are ready and prepared that that situation occurs," said Todd Landry of the Nebraska Department of Health and Human Services. "We want people to understand that this is not the right way of getting the service for your child, your teenager or your family."

State Sen. Tom White said lawmakers have been caught off-guard by the number of teenagers taken in under the law.

"What you've seen is an extraordinary cry for help from people all across the country," White said. "Nebraska can't afford to take care of all of them. Nebraska would like to be able to, but they know that we can't so we are going to have to change the law."

There's growing support among many Nebraska lawmakers to limit the safe haven law to children no older than three days. But several lawmakers said they'll push for something closer to a 30-day age limit.

The safe haven law was meant to protect infants, but there is no age limit under the current law. Five of the abandoned children were brought to Nebraska from out of state. Parents have traveled into Nebraska from Michigan, Indiana, Iowa, Florida and Georgia.

Tysheema Brown drove from Georgia to leave her teenage son at an Omaha hospital.

"Do not judge me as a parent. I love my son and my son knows that," Brown said. "There is just no help. There hasn't been any help."

Safe haven laws allow distraught parents, who fear their children are in imminent danger, to drop them off at hospitals without being charged with abandonment. Nebraska was the last state in the country to pass such a law. But every other state included an age limit.

The Department of Health and Human Services published a background profile on 30 of the 34 safe haven cases. The report found:

There are 6,600 children in state custody, according to the Department of Health and Human Services. Per capita the figure is one of the highest rates in the country, Landry said.

"I think this has spurred some really healthy conversations about how do parents get the help that they need when they are struggling with some of these parenting issues," he said.

"And the message that we have been trying to get out is, 'Don't wait until it's a crisis. Reach out to your family and friends.' "