How the US economy shrank, at a glance
What caused the US economy to shrink in the 4th quarter, at a glance
The U.S. economy shrank in the October-December quarter for the first time in 3½ 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 |