The U.S. economy shrank in the October-December quarter for the first time in 3 1/2 years, hurt by a sharp…
| The U.S. economy shrank in the October-December quarter for the first time in 3 1/2 years, hurt by a sharp cut in defense spending, fewer exports and sluggish growth in company stockpiles. |
| The decline, at an annual rate of 0.1 percent, marked a sharp slowdown from the 3.1 percent annual growth rate in the July-September quarter. |
| The drop in gross domestic product wasn’t as bleak as it looked. The weakness was mainly the result of one-time factors. Consumer spending and business investment, two pillars of growth, strengthened. |
| Here are the contributions made by the largest sectors of the economy in the fourth quarter: |
| Percentage-point effect on economic growth |
| Consumer spending +1.52 |
| Business investment +0.83 |
| Home construction +0.36 |
| Company stockpiling -1.27 |
| Government spending -1.33 |
| Change in trade deficit -0.25 |
| Source: Bureau of Economic Analysis |
