BREAKING

U.S. Economy Shrinks For The First Time Since Recession

Cuts to defense spending a major factor, report says

Jan 30, 2013 by Lisa Fine

Staff Writer t

Image: AP

The U.S. economy unexpectedly shrank from October through December for the first time since the recession in 2009, the Commerce Department announced.

Hurt by the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles, the economy contracted at an annual rate of 0.1 percent in the fourth quarter. It marked a slowdown from the 3.1 percent growth rate in the July-September quarter, the Associated Press reports.

The news came as a surprise to analysts, who had been expecting gross domestic product growth to be 1 percent to 1.2 percent.

The report may raise fears about the economic future for 2013. Deep automatic government spending cuts are ahead starting in March unless Congress reaches a deal to avert them. Americans are also grappling with an increase in Social Security taxes that has begun to leave them with less take-home pay, the AP said.

There were some bright spots in the report. Consumer spending rose 2.2 percent. Corporate spending on equipment and software rose after shrinking over the summer, the AP reports.

Via the Associated Press

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u
Jan '13

Yank

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Our ecconomy has basicly lived off government overspending for 6 years, it is only a matter of time before we have to pay the pipper.
- B2 • Vote Up r4 Replies
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u
Jan '13

AceLuby

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6 years? Try 12.
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u
Jan '13

AceLuby

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@AceLuby What am I saying... try 30...
- B1 • Vote Up
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u
Jan '13

Hireman

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The pipper? Oh man, that sounds terrible!
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u
Feb '13

botsmom

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@Hireman still laughing. How would I recognize a pipper? Would it come in human form? With a pip? Oh,God no!
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Post @botsmom
Jan '13

Medicinebow

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Gee....what a surprise.
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u
Jan '13

Libertyiskey

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Our debt to GDP ratio is 103.8 %. We're not doing good
- B2 • Vote Up r1 Reply
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Jan '13

BigD1391

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Exactly.. Russia's is like 10 or something like that. Plus- if our economy shrinks, so will revenue generated through taxation causing an even worse debt crisis. Liable to be paid in the future by young people like myself.
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Post @BigD1391
u
Jan '13

AceLuby

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Hmm... barely any cuts and it causes a shrink. For any that support a 'cuts only' approach, multiply this by 100 and there's your result.
- B2 • Vote Up r16 Replies
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u
Jan '13

Yank

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So you think raising taxes by a few billion a year is going to have a major impact on the cuts? Our deficit is more the the total of all income taxes paid in the US. Our yearly dept interest alone eats up almost half of our income taxes.

P.S. I wonder who was the one person who voted no.
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Post @Yank
Jan '13

Knightkore

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@Yank It's not about raising taxes....it's about raising jobs....get jobs back and you'll get the revenue back....as long as jobs are still scarce there won't be the required revenue needed....and cuts are the only way....
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Post @Knightkore
u
Jan '13

AceLuby

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@Yank Nope, never said that. My plan would be as follows:

1) Cut $400 billion from the military budget
2) Use that $400 billion and invest it in a coast to coast rail system, a federal bio diesel program, and bridge/road/sewer/water/electr icity/gas infrastructure projects, targeting people currently out of work. Get UE under 5%
3) Raise ALL taxes back to Clinton levels

In one year you have a balanced budget and a roaring economy.
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Post @AceLuby
u
Jan '13

Yank

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@AceLuby first of all we already have a coast to coast rail system (multiple ones). Second of all you are still talking a fraction of our deficit. Also moving spending around will not create a net impact. Lastly how much will going back to Clinton Era taxes increase revenue? You are still talking about needing to cut a trillion dollars.
- B2 • Vote Up
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Post @Yank
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Jan '13

seedtick

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@AceLuby The last thing you want is a federally owned rail system...check out AMTRACK. If you want better rail systems you need to give tax incentives to the railroad companies so they will rebuild the present system. It's all about right of ways and you can't buy that overnight. What do you want to do? Nationalize the rail system? Won't work.
Then where will the rest of the money come from? And how many generations will be working on this?
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Post @seedtick
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Jan '13

Neo_NtheMatrix

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So sad, so very very sad...
- B1 • Vote Up r7 Replies
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Jan '13

Neo_NtheMatrix

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But don't say I didn't predict this and try to warn you.
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o
Jan '13

woodtick57

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@Neo_NtheMatrix

you predicted that cutting the size of our gov't would be bad? when?
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Post @woodtick57
Jan '13

Neo_NtheMatrix

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Gutting the military? Yes.

I warned that gutting the military was not good policy.
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Post @Neo_NtheMatrix
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Jan '13

woodtick57

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@Neo_NtheMatrix

who 'gutted' the military? they just cut spending, as needed. any cuts to any gov't dept will mean decreased spending in the private sectors that provide for that dept...

seems another core value of less gov't has fallen....
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Post @woodtick57
Jan '13

Knightkore

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@woodtick57 Lets see we've cut the Raptor program, cutting edge weapons, intelligence programs, our enemies are either stealing current tech and we're GIVING F-16s and tanks to Egypt rather than selling....and an Egypt that is more close to terrorists than ever before....
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Post @Knightkore
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o
Jan '13

cleverusername

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"unexpectedly shrank " In who's mind?
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Jan '13

TheJimmy

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The "unexpected" part is what concerns me the most.
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u
Jan '13

RobertJHarsh

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We have had this "off and on" again recession since 2001 with no one interested in fixing the problem.
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u
Jan '13

Hireman

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To see governmental budget cuts being a major factor in economic downturn shows you that government spending has been way too high a percent of the GDP.
- B1 • Vote Up r27 Replies
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u
Jan '13

AceLuby

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"Way too high"? We've been hovering in this range since the 80's....

http://www.usgovernmentspending.com/spending_...
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Post @AceLuby
u
Jan '13

Hireman

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@AceLuby Exactly. Coupled with increased spending recently, you have an economic dip when you try to return to previous levels.
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Post @Hireman
u
Jan '13

AceLuby

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@Hireman In what world have we increased spending recently? We haven't had new spending since the stimulus.$400 billion of the current deficit is due to less people paying in and more people taking out due to the recession and nearly $600 billion was left over from the previous administration. If spending has been 'way too high' it has been that way since Reagan, yet it has only been since Obama has taken office that it has been an issue... actually that's not true, the same thing happened when Clinton was in office too. When the GOP control the WH "deficits don't matter".
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Post @AceLuby
u
Jan '13

Yank

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@AceLuby why do you keep trying to make this partison? Bush was one of the worst presidents ever, so why would you defend Obama doing what he did? Also not having new spending is not the issue. Spending greatly increased and then has kept at those levels.
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Post @Yank
u
Jan '13

Hireman

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@AceLuby Rampant government spending has been an issue long before Obama. I'm not sure why this has somehow become a Rep vs Dem thing in your eyes.
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Jan '13

Food4thoughts

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Could this be due to the uncertainty of an upcoming election?
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u
Jan '13

wayne2453

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the best is yet to come, the government is about to add millions of mexicans to the welfare rolls.Dependency weakens character but strengthens Government.
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u
Jan '13

CaryNickel

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Doesn't surprise me. The recession was never over. The Obama Administration juggled the numbers, and the media dutifully reported it that way, to get Obama and his fellow Democrats re-elected.
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o
Jan '13

NTBFW

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Again we told you so.
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Jan '13

Jeff_Woehrle

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Another recession? Obumble never ended the first one...
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u
Jan '13

Realthinker

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Economists have been warning of a coming recession for both Europe and the US for months. How can a predicted recession be 'unexpected'? Only if certain people turned a deaf ear to the truth.
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u
Jan '13

BelinKS

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Take the money from the military? What about shedding all that pork that gets added to bills that has nothing to do with it. I would bet that would accomplish more than de-funding our military. What about the raises congress just gave themselves?! Take that away! They make plenty of money for not doing much. Their not even on session a lot of the time! Quit giving billions to Pakastan! They are not up holding their end of the deal. If our country does not have enoug money at home, why are we giving so much to other countries!? I named Pakastan because I know we are giving them billions upon billions! The military is needed. Just not in Iraq or Afghanistan anymore. All out now!!!! We're already getting involved in Mali. Cut the pork, take away those raises, cut off Pakastan! Then see what our country's economy looks like. If it's not enough, cut off the other countries we're giving money to. Cut all that out!! At this time, the only thing the hill needs to think about is helping our own citizens, not hurting them worse! They are more concerned about other countries than our own. It's time to stop!!!
- B2 • Vote Up
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u
Jan '13

SmedleyButler

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Federal Reserve Money Printing Is The Real Reason Why The Stock Market Is Soaring
http://theeconomiccollapseblog.com/archives/f...
- B2 • Vote Up r1 Reply
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Jan '13

hankf68

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and the biggest Ponzi scheme in history continues!
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Post @hankf68
u
Jan '13

S-N-A-F-U

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You low information Obama supporters out there, it's going to get a helluva lot worse in the ensuing months ahead....Guaranteed! Sugggest you read the following....

"OBama supporters shocked and angry over tax increases.....
http://www.washingtontimes.com/news/2013/jan/...
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Jan '13

Penn1699

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Suprise!!!
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Jan '13

No_Bama

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We're on the Titanic with Hussein at the helm and he has the crew rearranging the deck chairs. Stockpile while you can, folks!
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Jan '13

russ

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"Stupid is as stupid does...."
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