More bad financial news has hit the nation, as the Commerce Department reports the U.S. economy has shrunk for the first time in three-and-a-half years, by 0.1 percent in the fourth quarter.
By way of comparison, the third quarter, from July-September, saw a 3.1 percent growth rate, according to The Associated Press.
Analysts say the sluggishness is due to defense cuts — the biggest to hit the military in 40 years, according to AP. Another factor: Exports have fallen.
Hiring remains slow. Job creation has stumbled at an estimated 150,000 new positions per month for the past couple years — barely enough to make a dent in the unemployment rate, which has held at a stubborn 7.8 percent for months, the AP reports. And economic forecasts are for more of the same: Analysts predict another high jobless rate for the month. The next jobs report is due for release this Friday.
The contraction is reportedly a surprise and fuels talk that President Obama’s tax increases may further weaken the economy.