Economy Shrinks a Tiny Bit

While it's not a huge drop, the US economy shrunk in Q4, marking the first time it has done so since the recession ended. The AP reports that the biggest cut in defense spending in four decades, reduced exports, and sluggish growth in company stockpiles contributed to the unexpected decline in GDP, which dropped at a 0.1% annual rate between October and December.

And it was a big surprise. Of 83 economists surveyed by Bloomberg, not one expected the decline, with projections ranging from a 0.3% to 2.1% gain.

While it could be a sign of coming doom (raising fears the economy won't be able to handle new tax increases now in effect), it could also be a one-off. 

The Wall Street Journal reports that the 15% decrease in federal government spending marked the biggest drop since 1973, a slump that strong consumer spending just couldn't overcome. 

Still, the GDP grew 2.2% for all of 2012, besting 2011's 1.8%. Meanwhile, payroll processor ADP today reported a gain of 192,000 jobs in January; that tops a revised December, which was lowered from 215,000 jobs to 185,000.