Why defense spending plunged 22% last quarter — and killed GDP
Posted by Brad Plumer on January 30, 2013 at 9:42 am
On Wednesday, the government announced that the economy had shrunk at a 0.1 percent annual pace between October and December. That came as a surprise to most economists, who were expecting at least modest growth. So what happened?
Less spending from the Pentagon, for one. Government defense expenditures plunged by a staggering 22.2 percent between October and December. According to the Bureau of Economic Analysis, the Pentagon spent significantly less on just about everything except military pay. Had the Pentagon not cut back on spending, the economy would have grown at a weak but positive 1.27 percent pace.
WHEN THE TEA PARTY MOES HARP ON FED SPENDING TAKE IT WITH A GRAIN OF SALT. A SUDDEN AUSTERITY MOVE BY THE FED GOV WIOULD PLUNGE US INTO A DEPRESSION.