US economic activity fell by 0.1% in the fourth quarter of 2012, mainly due to reduced inventory accumulation and reduced military spending (th timing of defense purchases was the problem there). But a brief analysis on marketwatch.com suggests that the economy is not that badly off and probably not headed into a recession.
The positive news from the report includes: consumer spending rose at the fastest rate in two years; home construction grew at more than a 15% annual rate; and business capital investment rose at a sizable 8.4% rate in the fourth quarter, reversing a decline in the third quarter. In fact, private demand strengthened in the fourth quarter, rising at a 3.3% rate.
A major take-away from the GDP report, the analysis says, is that contrary to what many politicians have been suggesting, cutting government spending reduces economic growth, especially in the short term.
No comments:
Post a Comment