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|
|Change in trade deficit||-0.25|
|Source: Bureau of Economic Analysis|