The Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce reported that the U.S. economy contracted by 0.1 percent in the fourth quarter of 2012 according to an “advance” estimate released today. This marks the first time that real gross domestic product (GDP) growth has been negative since the middle of 2009. The decrease in real GDP can be attributed to a decline in inventory investment in manufacturing industries, a downturn in federal government spending (especially for defense), and a decrease in exports of goods. In contrast, business investment and consumer spending both turned up for the quarter. Many economists view this fourth quarter decrease in real GDP as a “blip” rather than a signal of a new trend, as the factors contributing to the decline were largely “one-time.” Nevertheless, some say the negative figure may put more pressure on lawmakers to avert the automatic spending cuts under sequestration set to take place on March 1, which some economists have warned could further slow economic growth. The BEA report released today also showed that for the full year of 2012, real GDP increased 2.2 percent, compared to 1.8 percent in 2011.

Link: News Release