Gross domestic product, the broadest measure of the nation's economic growth, contracted at an annual rate of 0.1% from October to December, the Commerce Department said Wednesday. It was the first quarterly contraction since the second quarter of 2009, amid the Great Recession.Besides those cited above, the article is filled with additional excuses why this quarter was an anomaly. While economists are generally predicting the slow 2% to 2.5% economic growth the U.S. has experienced during the recovery will resume next quarter, if it falls short alarm bells of a new recession will be set off.
While a contraction is never encouraging, economists pointed to temporary effects that may have caused a one-time dip, and they see better growth ahead.
It's "the best-looking contraction in U.S. GDP you'll ever see," Paul Ashworth, chief U.S. economist for Capital Economics said in a research note. "The drag from defense spending and inventories is a one-off. The rest of the report is all encouraging."
A large cut in federal spending, primarily on defense, was one of the biggest drags on growth. Defense spending contracted at a 22% annual rate.
Thursday, January 31, 2013
Is the US Economy Heading Toward Another Recession?
The standard definition of a recession is two quarters of negative growth. While the economy has very slowly grown for the past three years, in particular for a recovery coming after a major recession, at least it has grown. Recent reports show the economy during the last quarter of 2012 shrank for the first time since the Great Recession. CNNMoney reports: