SHOCK: ECONOMY SHRINKS

[green73]

The U.S. economy posted a stunning drop of 0.1 percent in the fourth quarter, defying expectations for slow growth and possibly providing incentive for more Federal Reserve stimulus.

The economy shrank from October through December for the first time since the recession ended, hurt by the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles.

The Commerce Department said Wednesday that the economy contracted at an annual rate of 0.1 percent in the fourth quarter. That's a sharp slowdown from the 3.1 percent growth rate in the July-September quarter.

The surprise contraction could raise fears about the economy's ability to handle tax increases that took effect in January and looming spending cuts.

cont
http://www.cnbc.com/id/100419252

[Romulus]

And look what they blame..

The U.S. was hurt by the biggest cut in defense spending in 40 years.

[otherone]

huh. Right after the election.

[rprprs]

And look what they blame..

Not to mention what they propose as a possible solution...

...possibly providing incentive for more Federal Reserve stimulus.

[Fukthenannystate]

Why don't we get paul krugman to shed some light on the situation...

[Zippyjuan]

Most of it was blamed on companies holding back on doing anything while they waited to see what was going on with the Fiscal Cliff issue. Defense spending was lower after a huge surge in October (last month of the fiscal year) and that dropped off as well. Things are expected to rebound next month.

http://online.wsj.com/article/SB1000...039517142.html

The details weren't as discouraging as the headline. The drop, a surprise, was driven by a sharp fall in government spending and by businesses putting fewer goods on warehouse shelves, as well as by a decline in exports. The mainstays of the domestic private economy—housing, consumer spending and business investment in equipment and software—were stronger.

Research firm Capital Economics called the report "the best-looking contraction in U.S. GDP you'll ever see." Forecasters didn't see the decline as a harbinger of recession. They predicted the U.S. will expand at around a 2% pace in the current quarter, though the mood could shift Friday when the government releases its monthly snapshot of the job market.

For now, the economy is riding largely on the backs of consumers. Consumer spending, adjusted for inflation, increased at a 2.2% rate in the fourth quarter, up from 1.6% in the third. That included a jump in spending on durable goods, which are big-ticket items such as cars and refrigerators.

One thing that is helping consumers: They are starting to see substantial income gains after years of stagnation. The GDP report showed after-tax income rose at a rate of 6.8%, adjusted for inflation, the fastest pace since the recession.

[CaptUSA]

The U.S. was hurt by the biggest cut in defense spending in 40 years.

If only that were true... I'd take lower GDP every month if it was only due to reduced govt input!

[Michigan11]

If we don't get some increased war spending here soon were gonna deflate like a balloon

[HOLLYWOOD]

Nobel Peace Laureate Obama has broken the all time record for Military Weapons Sales all 4 years in Office.

Obvious much of this is laundered money through the Department of State with so-called USAID packages.

Washington has run up $300 Billion in Debt in the first 3 months of FY2013 could of been worse, as many cashed-in investments to avoid the tax increases in Dec 2012(reflected in Treasury's report on increase of tax collections for December/End of Tax Year).

Geithner has stopped making payments in the federal pension fund, that's more borrowed money that has to be repaid.

[erowe1]

And look what they blame..

The fact that military spending is included at all makes the data worthless.