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