US economy declines 0.1 percent due to budget cuts
Linkedin

US economy declines 0.1 percent due to budget cuts

Washington : PA : USA | Jan 30, 2013 at 9:22 AM PST
XX XX
Views: Pending
 
Vietnam's economy grew an estimated 5.83 percent in the first quarter of 2010

In the fourth quarter of 2012, the US economy unexpectedly declined 0.1 percent, the first such contraction since 2009. The fall was due to spending cuts and slower inventory growth.

This doesn't means declining economy of United States is a signal of another recession. On the first quarter of 2013 businesses will start buying more goods to fill in their shelves.

According to economist Nouriel Roubini, businesses were doing their annual inventory during the last quarter of 2012. The first quarter of the new year they will start to boost their profit and restock their shelves.

"Businesses were selling in the fourth quarter, but not replacing the stuff on the shelves," said Bill Hampel, chief economist with the Credit Union National Association. "When inventories fall in one quarter, they're really likely to rise the next quarter."

Economists expect the US economy to stand out again in the first quarter of this year. There are other factors to consider, such as residential investment increasing by 15.3 percent. And Superstorm Sandy also affected the economy when businesses had to close, delaying some shipping and shutting down retail stores.

"Today's report is a reminder of the importance of the need for Congress to act to avoid self-inflicted wounds to the economy," said Alan Krueger, chairman of the White House Council of Economic Advisers.

The Social Security tax increase will affect Americans' take-home pay by about 2 percent this year. Congress and White House were able to hold on to temporary cut in Social Security taxes to expire in January but prevented income taxes from rising for most Americans.

"Frankly, this is the best-looking contraction in US GDP you'll ever see," Paul Ashworth, an economist at Capital Economics, said in a research note. "The drag from defense spending and inventories is a one-off. The rest of the report is all encouraging."

1 of 13
Next
U.S Economy declines
U.S economy rate declines to 0.1pct. due to budget cuts
Mary Grace Keiner is based in Lake Mills, Wisconsin, United States of America, and is an Anchor on Allvoices.
Report Credibility
 
  • Clear
  • Share:
  • Share
  • Clear
  • Clear
  • Clear
  • Clear
 
 
 
Advertisement
 

News Stories

 
  • US economy shrinks 0.1 pct., 1st time in 3½ years

      SF Gate
    The U.S. economy unexpectedly shrank from October through December, the first quarterly drop since 2009 and a reminder of the economy's vulnerability as automatic cuts in government spending loom. The Commerce Department said the economy shrank at an...
  • DISMAL OUTLOOK: Economy Shrinks for 1st Time in More Than 3 Years

    FoxNews.com The country's fiscal health got a gut-check Wednesday after a report by the Commerce Department showed the U.S. economy unexpectedly shrank in the fourth quarter. Despite stronger consumer spending, it's the biggest dip the country has...
  • US 4Q GDP Falls 0.1%, First Decline Since Q2 2009

      International Business Times
    The US economy grew at a 2.2 percent rate in the first quarter, the U.S...This isn't the start of a new recession, said Paul Ashworth, chief U.S. economist at Capital Economics, in a note to clients. Admittedly, the decline in exports reflects the...
  • US economy shrinks 0.1 pct., 1st time in 3 1/2 years

      Star Tribune
    The U.S. economy shrank from October through December for the first time since the recession ended, hurt by the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles. The decline occurred despite faster...
  • U.S. Economy Unexpectedly Contracted in Fourth Quarter

      The New York Times
    Economy Unexpectedly Contracted in Fourth Quarter Nick Ut/Associated Press The government said economic output in the quarter fell at an annual rate of 0.1 percent. Published: January 30, 2013 The United States economy unexpectedly reversed course in...
  • Surprise: U.S. economy shrank in 4th quarter

      Charlotte Observer Online
    Wednesday, Jan. 30, 2013 The U.S. economy contracted slightly in the final months of 2012, as defense spending plummeted and businesses depleted their inventories, in a surprising development that could presage economic troubles to come. Gross...

Images

 >
 

More From Allvoices

Report Your News Got a similar story?
Add it to the network!

Or add related content to this report

Most Commented Reports



Use of this site is governed by our Terms of Use Agreement and Privacy Policy.

© Allvoices, Inc. 2008-2014. All rights reserved. Powered by PulsePoint.