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Economy Shrinks in Q4

Worst part for the White House?  This was supposed to happen in the 1st Quarter according to their script.

Then they could have blamed it on the GOP House and the fiscal cliff.  This way, it’s all on Obama.

The U.S. economy unexpectedly contracted by 0.1 percent in the fourth quarter, the first setback in economic growth since the middle of 2009.

The downturn will inevitably factor into the ongoing budget war in Washington. Congress and the White House are wrangling over what to do with a round of spending cuts set to take place on March 1 — and a possible government shutdown in late March — that some economists have warned could further slow economic growth.

Analysts had expected GDP growth to be 1 percent to 1.2 percent, but the advance fourth quarter estimate from the Commerce Department’s Bureau of Economic Analysis on Wednesday painted a different picture.

The downturn, according to the BEA, reflected lower private inventory investment, reduced government spending at both the federal and the state and local levels, as well as decreased exports.

“Reduced government spending” is a bogus claim.  Federal spending was up $31 Billion in Q4 2012 compared to Q4 2011.   Unless the C+I+G+(X-M) formula has changed since I last took a macroeconomics course…

No, what happened in Q4 will likely be explored in the coming days and weeks. The likely answer: In anticipation of higher taxes from either ObamaCare, the tax deal or both, companies and individual consumers just stopped spending.

Or have the stories about a piss-poor Christmas shopping season not come out yet?  Perhaps the fact that while Amazon had sales jump 22 percent, at the same time profits shrinking 45 percent is a portent of things to come?

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