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.
The 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