In this Dec. 5, 2012, photo, containers are unloaded from cargo ships at the Port of Los Angeles. The U.S. economy shrank unexpectedly in the October-December quarter of 2012, at an annual rate of 0.1 percent.
Associated Press
WASHINGTON
The U.S. economy shrank unexpectedly late last year, a reminder of the biggest threat it faces in 2013: sharp government-spending cuts and prolonged political budget fights.
A plunge in defense spending helped push the economy into negative territory for the first time since mid-2009. The contraction in the October-December quarter came in at an annual rate of 0.1 percent, according to a government estimate released Wednesday.
The likelihood of another recession appears remote. The economy is forecast to grow around 2 percent this year as strength in areas such as housing and auto sales could partly offset government cutbacks. Investors appear unfazed, too: The stock market has surged more than 6 percent this year and is nearing an all-time high.
But economists warn that further spending cuts would weaken a still-precarious recovery.
Deep spending cuts in defense and domestic programs are set to kick in March 1. Most of the federal government could shut down March 27 if Congress doesn’t extend a temporary measure authorizing funding. And the nation’s borrowing limit must be raised by May 18 or the government could default on its debts.
Comments
The biggest threat it faces is Barack Obama.
toycannon if you read the facts and put your hatred of President Obama aside you might understand that this to be a result of decreased defense spending. Any economist will tell you that you don't cut spending when an economy is struggling. Imagine the impact republican spending cuts would have on the economy at this time.
Obama's added about six trillion to the debt and his economy is horrible because his answer is always more government. How's private sector growth figure in the equation with all you big government, big spending guys? Or does the private sector ever even cross your mind? You think the answer is more spending? We've done that, what do we have to show for it. You like this economy? You like this direction? You think the answer is more government and less private sector?
bush is still adding to the nation's debt. He spent trillions on two unfunded wars, trillions in unfunded tax cuts and an unfunded 800 billion dollar drug prescription program too benefit the pharmaceutical companies. All of that borrowed money went directly to the debt.
Unfunded means he borrowed the money. Borrowed the money means we started paying interest the minute he borrowed the money. The next minute we started paying interest on the interest on the debt and that is why the debt gets bigger.
When bush took office we had the strongest economy in the history of the world, a balanced budget and the formula for paying of the debt. When bush left office he left the worst recession since the great depression.
cambridge is still blaming Bush! Obama had four years and just made it much worse. But Obama is in charge so if it's tax and spend you want, it's tax and spend you're going to get. But honestly, believe it or not, cambridge is still blaming Bush.
Todays economy is still a lot better then when President Obma took over. 4 years ago 800,000 people a month were losing jobs. The stock market tumbled.
Big ticket items are recovering. Housing is recovering. Jobs are recovering.
Thank You President OBAMA