United States economy shrinks by 0.1% in last quarter of 2012

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Friday, February 1, 2013

The United States Chamber of Commerce headquarters.
Image: AgnosticPreachersKid.

The United States economy shrank by 0.1% in the last three months of 2012 according to official statistics released on Wednesday by the United States Department of Commerce. The contraction in the economy comes after growth of 3.1% in the previous quarter (July to September) and is the first contraction since the 2009 recession.

Economic growth is thought to have fallen due to cuts in government spending, including a 22% cut in the defence budget being the largest decline in defence spending since 1972. Economic analysts had expected a 1.1% in growth according to polling conducted by the news agency Reuters and that none of them had predicted a contraction in the economy.

Export levels were at their lowest for almost four years, this may be due to the recession in Europe and a decline in growth in China. However, there were increases in consumer spending and investments which shows that there may be other problems with the economy and that the "fiscal cliff" issues of December did not worry markets too much.