The Fed’s interest-rate-setting committee, after a two-day meeting Wednesday, attributed the lull in growth to Superstorm Sandy and other temporary factors, noting that consumer and business investment spending — the two main engines of the economy — continued apace.
“Economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors,” the Fed said in a statement.
“The committee completely dismissed the economic contraction,” said Harm Bandholz, an economist at UniCredit Markets, suggesting the central bank — like most other economists — expects the economy to accelerate again this year, albeit to a still-subdued growth rate.
“The degree of the slump in government spending was a surprise,” Mr. Bandholz said, noting that the drop in defense spending was the largest in four decades. “But this is not a recession.”
• Dave Boyer contributed to this report.
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