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Surprise: U.S. economy shrinks for first time in near four years

- The Washington Times - Wednesday, January 30, 2013

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.

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