This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-21261323
The article has changed 4 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| US economy shrinks a surprise 0.1% in fourth quarter | US economy shrinks a surprise 0.1% in fourth quarter |
| (35 minutes later) | |
| The US economy unexpectedly shrank at an annualised rate of 0.1% in the fourth quarter of 2012, initial official estimates indicate. | The US economy unexpectedly shrank at an annualised rate of 0.1% in the fourth quarter of 2012, initial official estimates indicate. |
| If confirmed, it would be the first contraction logged by the US economy since the 2009 global recession. | If confirmed, it would be the first contraction logged by the US economy since the 2009 global recession. |
| The world's largest economy grew 3.1% in July to September. | The world's largest economy grew 3.1% in July to September. |
| The fourth quarter period was dominated by the "fiscal cliff" - the spending cuts and tax rises that had been due to come into force from 1 January. | The fourth quarter period was dominated by the "fiscal cliff" - the spending cuts and tax rises that had been due to come into force from 1 January. |
| These were avoided by a last-minute deal between the Republican-dominated Congress and the White House. However, economists warned at the time that fears of an abrupt cut in government spending were undermining business and consumer confidence. | These were avoided by a last-minute deal between the Republican-dominated Congress and the White House. However, economists warned at the time that fears of an abrupt cut in government spending were undermining business and consumer confidence. |
| However, part of that deal includes tax rises for the highest-earning Americans and - more significantly for the economy - the expiry of a payroll tax holiday for all US employees, something which is widely expected by economists to further weigh on growth during the current quarter. | |
| Spending cuts | |
| The fourth-quarter shrinkage in economic output comes as a shock to analysts on Wall Street, who had been expecting 1.1% growth according to a poll by news agency Reuters. Not one economist surveyed had predicted an economic contraction. | |
| Growth was dragged down by public spending cuts - notably a 22% reduction in federal defence spending - and by the decision of many businesses to halt the rapid rebuilding of their inventories that began over the summer. | |
| However, consumer spending did pick up, as did business investment, suggesting that the economy may have some underlying momentum. Residential investment also grew 15%, adding to evidence that the housing market has finally turned the corner. | |
| The recently re-elected President Barack Obama and Congress are expected to clash once again in the coming months over the debt ceiling. | |
| The US Treasury is approaching the $16.4tn (£10.3tn) legal limit on its total debt, and must gain permission from Congress to borrow the money needed for it to continue meeting its bills. | |
| Last time there was a stand-off over the issue, in the summer of 2011, the political deadlock prompted ratings agency Standard & Poor's to deprive the US of its top AAA rating, a move that sent stock markets sharply lower. | |
| The US House of Representatives has passed a bill to extend the country's debt limit until May, deferring the budget debate for a few months at least. |