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America’s Economy Shrinks

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Pacific Money

America’s Economy Shrinks

The U.S. Commerce Department noted today that the American economy contracted at an annual rate of 0.1% in the 4th quarter.

America's economy shrank in the last quarter of 2012 (October to December) for the first time since the "great recession" came to a close.

Several factors may have led to the slowdown. These include large cuts in defense spending, lower exports and slow growth in company stockpiles.

The U.S. Commerce Department noted the economy contracted at an annual rate of 0.1 percent in the fourth quarter —  a surprising reverse from the 3.1 percent growth rate of the prior quarter.

NBCNEWS noted that "The weakness may be because of one-time factors, though. Government spending cuts and slower inventory growth subtracted a total of 2.6 percentage points from growth."

One bright spot according to CNNFN: "Consumer spending makes up the largest part of the U.S. economy and accelerated at a 2.2% annual rate in the fourth quarter."

With many predicting that America's housing market is on the rise and that a slow but steady recovery has taken hold, this certainly will have many questioning America's economic comeback.

Personally, being an American-based based Editor, I have seen firsthand the economic hardships many are facing. Foreclosures in my own neighborhood, approximately fifty miles to the south of Boston, have not stopped. One house has been foreclosed not once, but twice. Many Americans are still looking for work or are underemployed.

What do you think? Is America's economy in trouble or this just a "bump in the road?"

Harry Kazianis is editor of The Diplomat. Follow him on Twitter: @grecianformula