U.S. economy shrinks for first time in 3 1/2 years
Contraction due to cuts in federal spending
Uncle Sam cut spending in the fourth quarter of 2012, causing the U.S. economy to contract for the first time in more than three years.
Gross domestic product, the broadest measure of the nation's economic growth, contracted at an annual rate of 0.1 percent 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.
The contraction was due to cuts in federal spending, primarily on defense. Defense spending contracted at a 22 percent annual rate.
Weaker U.S. exports and a contraction in spending on commercial buildings also weighed on economic growth, more than canceling out strong consumer spending.
Consumer spending makes up the largest part of the U.S. economy and accelerated at a 2.2 percent annual rate in the fourth quarter.