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Commentary

17 Scary Numbers From the Fourth Quarter

Despite exhibiting hints of optimism for 2012, the 2011 fourth quarter produced plenty of disconcerting facts.

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In October, I took a look at 17 scary numbers that jumped out at me as the most frightening of the third quarter. And even though the fourth quarter wasn't quite as terrifyingly volatile as the third, there were still plenty of disconcerting facts floating around the market.

14%: The decline in  Bank of America (BAC) stock during the quarter. The shares are down nearly 60% for the year. Considering financials were up 6.56% during the fourth quarter, it shows just how many challenges the megabank still faces. As much as the firm wants to forget the financial crisis, the crisis keeps rearing its ugly head. Morningstar user SFElSid flagged this as one of his scariest stats in the third quarter, and it remains scary today. 
 
75%: Amount of  Research in Motion's (RIMM) market cap that vanished in 2011. Just when it seems things can't get worse for the beleaguered handset maker, they do. Delays of new hardware, system outages, poorly received tablets, and a new operating system that keeps getting pushed back all took their toll. The firm is still expanding in emerging markers and has valuable intellectual property, but time is growing short.

2.6 million: The number of workers marginally attached to the labor force. These people are not aren't included in the official unemployment rate because they hadn't looked for a job in the four weeks before the survey. As the job market improves, these workers will start looking for work again, keeping the headline unemployment rate high.

310: Days until the 2012 presidential election. That means there are still another 310 days of breathless political news stories as well as 310 days until there is any hope of getting anything done in Washington.

5%: The price decline of Zynga (ZNGA) shares on the firm's first day of trading. Instead of seeing the big pop that many IPO investors expected, the market quickly dumped the social-gaming company's shares. It's amazing that the firm and its bankers misjudged demand by so much. On the other hand, it is somewhat comforting that the market didn't accept the sky-high valuation.

2: Number of months Congress extended the payroll tax cut. Even though both sides of the aisle wanted to extend the cut, it took weeks of drama to enact an incredibly short-term solution. If that isn't scary enough, congressional lawmakers are now going to do the same thing again in two months.

25%: One-year loss in China-region stock funds in 2011. Many investors put money into China funds this year hoping to cash in on the nation's fast-growing economy. However, the subpar performance of these funds in 2011 shows that this trade is hardly risk-free or a slam dunk.

49%: Level of Chinese economic output from investments in physical capital. China's infrastructure investments far outpace the historical levels of spending by other fast-growing Asian economies, such as those of Korea and Taiwan. If these investments turn out to be unwise or too large, China could face an uncomfortable slowdown in growth.

3.4%: The decline in the S&P/Case-Shiller 20-city housing index in October 2011 from October 2010 levels. Although housing has left the "unmitigated disaster" territory of a few years ago, it is still a challenged sector. It will need to see real strength before we see a truly robust recovery.

190: The reduction in basis points of  3M's (MMM) operating margin in its third-quarter earnings. 3M management said that many of its  customers were beginning to cut back on inventories as they fretted about another global economic slowdown. This lack of corporate confidence is not comforting.

3.5%: The personal savings rate in November according to the Bureau of Economic Analysis. This is down slightly from October levels and less than what is needed for consumers to truly deleverage their personal balance sheets. If the rate picks back up to a more sustainable level, consumer spending could take a hit.

1%: Increase in sales at  Johnson & Johnson's (JNJ) consumer division, well below trend. The pharmaceutical giant keeps  battling with quality issues and has issued dozens of recalls during the last year. The firm will need to truly fix the quality issues and rebuild its brand image if it hopes to see meaningful growth in this segment again.

1: Number of votes that were needed to derail an EU-managed European fiscal union. The United Kingdom's decision to veto any EU-managed budget pact means that the eurozone countries will need to create an entirely new intergovernment framework to enforce budget rules. This is going to take a fair amount time, effort, and resolve to set up and to be successful. Alas, these three things have been in short supply in Europe recently.

8%: Spain's new projected budget deficit in 2011, up from an earlier estimate of 6%. The fact that Spain, which has been dutifully implementing budget cuts and tax increases, can't bring its primary budget deficit under control shows how hard of an exercise austerity is. This doesn't bode well for the rest of Europe's plans to cut spending.

114.7 billion: The amount in euros that the European Banking Authority said in December that European banks need to add to their capital cushion. This number has crept up all year and is likely still far too low to protect against the failure of the eurozone.

452 billion: Bank deposits held by the European Central Bank in euros in late December, a new record. To much fanfare, the ECB began offering a three-year refinancing effort, but it seems like a lot of that cash is just being sent right back to the ECB for safe keeping instead of being lent out to businesses or to governments as was hoped.

4: Billions of dollars  AT&T (T) will take as a  charge in the fourth quarter after its failed deal to buy  Deutsche Telekom's (DTEGY) T-Mobile business. Beyond the huge breakup fee, AT&T will now have to scramble to find more wireless spectrum to facilitate the growing demand for data services.

What are the scariest numbers you saw this quarter?

Bearemy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.