The nation’s economy unexpectedly shrank by 0.1 percent in the fourth quarter of 2012, casting fresh doubt on the strength of the economic recovery.

Arrow_Down_ArtisticThe new estimate of gross domestic product (GDP) from the Commerce Department marks the first time the economy shrank since it was in the depths of the recession in mid-2009.

As the “fiscal cliff” loomed, a significant downturn in government and defense spending contributed to the surprising number.

Real federal government expenditures and investment fell 15 percent in the fourth quarter, compared to a 9.5 percent increase in the third. And national defense spending tumbled 22.2 percent, compared to a 12.9 percent boost in the third quarter. Non-defense spending actually increased 1.4 percent in the fourth quarter.

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Source: Peter Schroeder | The Hill | January 30, 2013