Economy takes a fourth-quarter stumble

From the Washington Post:

“The U.S. economy contracted slightly in the final months of 2012, as defense spending plummeted and businesses depleted their inventories, in a surprising development that could give hints of the economic challenges to come.

Gross domestic product fell at a 0.1 percent annual rate in the fourth quarter, the Commerce Department said Wednesday, far below the 1.1 percent gain that analysts had forecast. The number will be revised extensively in the months ahead as more complete data becomes available, but if the number stays in negative territory, it would be the first contraction for the U.S. economy since the second quarter of 2009.”

That’s not good news by any means, but it’s also not as bad as it might appear. In wake of the announcement, for example, the stock market plummeted a whopping 18 points, or 0.13 percent, as of 12:30 p.m. In addition, a new report from ADP, which monitors private-industry hiring, predicts that the economy added a decent 192,000 jobs in January.

“According to the ADP National Employment Report, private sector employers created an average of 183,000 new jobs per month during the last three months,” said Carlos A. Rodriguez, ADP’s president and chief executive officer. “This is an encouraging sign of steady improvement in the job market.”

NERprJan2013-chart1

So what drove the surprising GDP decline? According to the Wall Street Journal, a lot of it can be attributed to a sudden 15 percent reduction in federal spending in the fourth quarter. That was the largest single-quarter drop since 1973. Clearly, taking that much money out of a still-fragile economy had an impact.

To which Sen. Mitch McConnell responded, again according to the WSJ:

“Clearly, we need to address spending. There’s simply no other way to solve the problem.”

– Jay Bookman

334 comments Add your comment

arnold

January 30th, 2013
1:07 pm

Nothing goes straight up, nor straight down.

getalife

January 30th, 2013
1:10 pm

It shows how government spending effects the economy and the more cuts are 30 days away.

the cat

January 30th, 2013
1:12 pm

That Mitch, such a kidder.

getalife

January 30th, 2013
1:13 pm

“Clearly, we need to address spending. There’s simply no other way to solve the problem.”

Ignorant red meat for cons.

Granny Godzilla

January 30th, 2013
1:17 pm

The good news in the report?

Personal income is way up, leading to an increase in both personal savings and consumption. Private sector investment is way up.

UNCLE SAMANTHA

January 30th, 2013
1:18 pm

it was the hurricane stupid

Keep Up the Good Fight!

January 30th, 2013
1:18 pm

GOP Bumper sloganeering….. rinse, repeat, regurgitate.

Simple Truths

January 30th, 2013
1:19 pm

I was wondering if Jay would blog about the GDP numbers. But, I’m now more focused on the severe weather rolling across the metro.

I’m out for this thread. Enjoy the show.

arnold

January 30th, 2013
1:19 pm

Don’t overlook the increases in housing construction. Things are rebounding, just more slowly than many would like.

Steve

January 30th, 2013
1:22 pm

See what happens when you enforce austerity too soon, conservatives? You can’t have it both ways with job growth and bringing down the deficit.

stands for decibels

January 30th, 2013
1:24 pm

“Clearly, we need to address spending. There’s simply no other way to solve the problem.”

You don’t cut your way to prosperity, you morons.

OBIWAN

January 30th, 2013
1:24 pm

How can this be, our fearless leader promised us prosperity, low unemployment, higher wages for the middle class, did he lie to us?

JohnnyReb

January 30th, 2013
1:24 pm

The problem with government spending is the government sells nothing for profit and can only increase spending by taking from individuals and redistributing or printing money that eventually will lead to inflation.

Keynesian economics is a demonstrated failure, but the Left clings to it probably more so than the right to guns.

getalife

January 30th, 2013
1:25 pm

Another shooting in Arizona.

OBIWAN

January 30th, 2013
1:26 pm

stands for decibels;
It is a great place to start, if we keep spending twice as much as we take in, how long can that go on for? I wish they taught math in those Ivy League schools….Why is the left so opposed to a balanced budget?

JohnnyReb

January 30th, 2013
1:27 pm

BTW – there is none, and I mean no CEO’s that would retain their job with the ROI that has marked the Obama recovery plan.

The economy is recovering in spite of, not the result of Democratic policies.

Steve

January 30th, 2013
1:28 pm

(Out of one side of their mouths) – Obama, where are the jobs?! (out of the other side of their mouths) – Obama, why aren’t you cutting the deficit more?

Keep Up the Good Fight!

January 30th, 2013
1:28 pm

Hmmm, seems that roads for profits (tolls) here in GA sure did get a lot of objection from the right.

Janney

January 30th, 2013
1:28 pm

“How can this be, our fearless leader promised us prosperity, low unemployment, higher wages for the middle class, did he lie to us?”

Way to cherry pick the article.

OBIWAN

January 30th, 2013
1:28 pm

Wait Obozo said we don’t have a spending problem; he has never lied before, right? NOT!

getalife

January 30th, 2013
1:29 pm

“Why is the left so opposed to a balanced budget?”

Because the gop can and will blow out the deficit again.

Erwin's cat

January 30th, 2013
1:30 pm

Another shooting in Arizona.

probably several in Chicago

OBIWAN

January 30th, 2013
1:31 pm

No need to cherry pick, the facts are that the middle class just got the biggest tax rate increase in history, yet we were promised this would NOT happen, or did you lefties forget that promise? Right Janney?

OBIWAN

January 30th, 2013
1:32 pm

Getalife;
I did not know that the left could predict the future….

UNCLE SAMANTHA

January 30th, 2013
1:32 pm

IT WAS THE HURRICANE………….. THATS WHY THE DROP IN GDP

getalife

January 30th, 2013
1:32 pm

cat,

Yes, the teen that performed at the inaugural was shot dead.

St Simons

January 30th, 2013
1:33 pm

“..a sudden 15 percent reduction in federal spending in the fourth quarter.
That was the largest single-quarter drop since 1973.”

Ditch Mitch from yeehaw Kentucky -”Clearly, we need to address
spending. There’s simply no other way to solve the problem.”

see cons, the good thing about zero credibility is, it can’t go any lower.

getalife

January 30th, 2013
1:34 pm

“I did not know that the left could predict the future…”

I am not left but base it on the facts from the past.

The gop took a surplus and blew out the deficit.

Deal with that fact con.

Keep Up the Good Fight!

January 30th, 2013
1:34 pm

probably several in Chicago

Yep. Time to act on a federal level. But let’s try sticking to the blog thread for a page or two before the master deflection, shall we?

OBIWAN

January 30th, 2013
1:34 pm

Getalife;
Did u skip math class; it is NOT the GOP that has blown the budget, oh that’s right they don’t even know how to right a budget.

Just Saying..

January 30th, 2013
1:34 pm

OBIWAN: “…our fearless leader…”

Our two term fearless leader…

You’re welcome.

stands for decibels

January 30th, 2013
1:34 pm

Why is the left so opposed to a balanced budget?

Nobody has proposed a “balanced budget” for this year, next year, or the one after that.

We will not have one any time soon. To say you’re “for a balanced budget” is like saying you’re “for fluffy kitties,” only the former position means a good deal less.

the cat

January 30th, 2013
1:34 pm

Erwin’s cat-you are a cavalier azzhat

Erwin’s cat

January 30th, 2013
1:30 pm
Another shooting in Arizona.

probably several in Chicago

Karma, baby!

Darwin

January 30th, 2013
1:35 pm

One track mind.

getalife

January 30th, 2013
1:35 pm

obi,

Run along con hack.

No credibility.

what a country

January 30th, 2013
1:36 pm

bet the left thinks its Bushs fault

OBIWAN

January 30th, 2013
1:36 pm

Getalife;
Deal with the fact that it was a GOP controlled congress that passed a surplus budget, or did you forget that?

YouLibs

January 30th, 2013
1:37 pm

JohnnyReb

“The economy is recovering in spite of, not the result of Democratic policies.”

Recovering from what, Johnny?

stands for decibels

January 30th, 2013
1:37 pm

Oh, and we’ve been running a debt of some sort since the 1830s, and we always will.

(I know this is stating the obvious, but a few people don’t seem to get that.)

indigo

January 30th, 2013
1:37 pm

How many of you are willing to face the likelihood that, as time goes by, things are only going to get worse and worse?

OBIWAN

January 30th, 2013
1:38 pm

Still no one on the left has told me how they plan on balancing the budget, there are free math classes online, if you need help

Joe Hussein Mama

January 30th, 2013
1:39 pm

E. Cat — “probably several in Chicago”

Dude, uncool.

I know you were trying to crack a joke, but that was a half-step over the line, IMO.

Erwin's cat

January 30th, 2013
1:39 pm

Erwin’s cat-you are a cavalier azzhat

funny I’ve never been called cavalier before :) …I got your karma in my pants baby!

Joe Hussein Mama

January 30th, 2013
1:40 pm

indigo — “How many of you are willing to face the likelihood that, as time goes by, things are only going to get worse and worse?”

I am. Fortunately, I’ll be long dead before the sun goes nova. :D

rightwingextreme

January 30th, 2013
1:40 pm

Jay,

I’m not a betting man, but I’d wager you’d be excoriating Bush right about now for a drop in the GDP.

Mitch is right…the spending is the issue. You can’t keep spending what you don’t have.

Even the might AJC must realize that.

getalife

January 30th, 2013
1:40 pm

cats don’t wear pants silly.

Whatever

January 30th, 2013
1:40 pm

stands,

You also don’t deficit spend your way to prosperity either.

ATL Tiger

January 30th, 2013
1:40 pm

What a poorley attempted spin job by Jay.

There was no decrease in government spending during the fourth quarter of last year. In fact, the government spent more money between October and December of 2012 than it did during the previous two quarters. So federal spending actually increased during the 4th quarter.

Federal outlays by quarter:

1st: 966,188

2nd: 884,957

3rd: 809,969

4th: 907,912

http://www.fms.treas.gov/mts/mts.pdf

If a cut in federal defense spending was the problem, there still wasn’t an overall decrease in federal spending. It should’ve been a wash.

getalife

January 30th, 2013
1:41 pm

You can see the turtle’s stupid comment worked on the party of stupid.

Soothsayer

January 30th, 2013
1:41 pm

The proverbial ship is getting ready to hit the sand here. Going to shut down the old computer for safe-keeping. Check back later.

Drudge

January 30th, 2013
1:42 pm

It’s funny, when Obama is in office, a decline in GDP is “a stumble” but when Bush is in office, it’s “the great recession.” I see…

So with your inference here Jay, shouldn’t we just totally max out spending, shoot for $50T in debt to grow the economy? That’s what you fail to see – and why the Fed pumped during Q4 – Keynesian government spending is not true economic growth. Get it through your head! It is buying statistics, when you turn it off, it all goes away. Whereas, you CAN’T turn off private sector growth. No wonder this country is doom – people read what you wrote and instead of looking at the big picture – an economy that is in recession or growing marginally – the point is Mitch McConnell is a big mean jerk. Follow the bouncing ball, Sheeple.

Erwin's cat

January 30th, 2013
1:42 pm

I know you were trying to crack a joke, but that was a half-step over the line, IMO

sadly, no not a joke, just an observable assumption…not sure why people are taking offense to the comment, they have about a dozen a weekend

Lynnie Gal

January 30th, 2013
1:42 pm

Now what is the definition of insanity again? Doing the same thing over and over and expecting different results? McConnell clearly needs to go back on his meds–or off them, whichever the case may be. Personally, I believe this is the result of Republican intransigence during the Fiscal Cliff. It created a great amount of uncertainty during the biggest shopping period of the year–Christmas. I know that personally, the drama surrounding the Fiscal Cliff affected my Christmas shopping this year–I didn’t do any. Period. I’m sure there were many other Americans who were cautious with spending while the Republican drama played itself out. Republicans are hurting our economy and think that’s going to give them a political advantage. They truly are the “Stupid Party”.

the cat

January 30th, 2013
1:42 pm

erwin’s cat-We can imagine the lack of what is in your pants but thanks for playing. Now we all can laugh at you.

Granny Godzilla

January 30th, 2013
1:43 pm

stands for decibels

January 30th, 2013
1:43 pm

You also don’t deficit spend your way to prosperity either.

Sure you do. That’s what we should be doing. We can borrow money for next to nothing. Actually, people are paying us to lend us money–that’s how sh-tty the payout from T-bills is these days.

All we need to do is get morons like Mitch and John and their deficit-scold enablers out of the way

East Cobb RINO, Inc (LLC)

January 30th, 2013
1:43 pm

I often hear conservatives saying “we do not want to be another Greece”. Sure Greece had a debt problem but it only got worse when austerity measures were forced on them. I would like to see a smaller spending budget, but it must be gradual and only as the public sector continues to grow.

Mick

January 30th, 2013
1:43 pm

Still no one one the right has told me how they are going to balance the budget besides going after social security and medicare – both non-starters…

Jefferson

January 30th, 2013
1:44 pm

We didn’t have a spending problem until we cut taxes (and started wars).

rightwingextreme

January 30th, 2013
1:45 pm

Can you imagine where this country would be right now if we didn’t have the following:

Unemployment Insurance
EBT
Welfare
EITC
Disability
Deficit Spending
47% not paying federal income taxes on their 1040
An accurate measurement of the REAL unemployment situation in this country.
An overly biased media that attempts to whitewash everything for this administration.

All of these are masking the terrible, and I mean terrible shape the economy is in. Without these there would be rioting in the streets and President “Skeeter” would have captured only Illinois and the People’s Republic of Massachusetts.

Don’t believe me….go see Greece where their economic day of reckoning is happening.

YouLibs

January 30th, 2013
1:45 pm

“You should never buy a car unless you can pay cash for it. You should live under a bridge until you save enough money to pay cash for a house. You should never expand a business unless you have enough cash to do it BECAUSE DEBT IS SUCH A BAD, BAD, BAD THING!”

…Beck U. Valedictorian

TaxPayer

January 30th, 2013
1:45 pm

Let’s have us a sequester.

George P. Burdell

January 30th, 2013
1:46 pm

This number is going to be very difficult to use as an indicator of the overall economy because there are so many unusual components. Yes government spending went down, but a significant factor to that is that in the previous quarter spending increased significantly, especially in defense related activities. One quarter rarely indicates a trend one way or the other and since government spending is not likely to actually decrease, over time, GDP will reflect the average level. In other words, you cannot say government spending hurt GDP in the last few months without also recognizing that the shift artificially increased GDP in July-September.

alittlecommonsense

January 30th, 2013
1:46 pm

Quotation by Sir Winston Churchill: We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

Likewise spending. A government spending its nation to prosperity is like a family spending its way to prosperity. Increased spending might make you look prosperous – until the crash.

The spending can’t continue without a crash coming eventually.

Erwin's cat

January 30th, 2013
1:46 pm

the cat – Now we all can laugh at you

What’s funny is you bashing Christians and religions at every opportunity but yet you show have some sorta faith in “karma”
i doubt you’ll see the parallels

rightwingextreme

January 30th, 2013
1:46 pm

ATL Tiger

January 30th, 2013
1:40 pm
What a poorley attempted spin job by Jay.

There was no decrease in government spending during the fourth quarter of last year. In fact, the government spent more money between October and December of 2012 than it did during the previous two quarters. So federal spending actually increased during the 4th quarter.

Federal outlays by quarter:

1st: 966,188

2nd: 884,957

3rd: 809,969

4th: 907,912

http://www.fms.treas.gov/mts/mts.pdf

If a cut in federal defense spending was the problem, there still wasn’t an overall decrease in federal spending. It should’ve been a wash.

Now don’t confuse’em with the facts!

Joe Hussein Mama

January 30th, 2013
1:47 pm

ATL Tiger — “What a poorley attempted spin job by Jay. There was no decrease in government spending during the fourth quarter of last year.”

Then your complaint lies with the WSJ, as he was clearly *citing their claim* to that effect.

retiredds

January 30th, 2013
1:48 pm

sounds like Obiwan is upset. boo hoo

getalife

January 30th, 2013
1:48 pm

Stay the course party of stupid.

Our President needs the house.

barking frog

January 30th, 2013
1:49 pm

More jobs, less war and all will be o.k.

Joe Hussein Mama

January 30th, 2013
1:49 pm

R. W. Extreme — “Now don’t confuse’em with the facts!”

Guess they’re all out of calculator batteries at the Wall Street Journal and have to count on their fingers, since Jay was citing their claim.

ByteMe - Got ilk?

January 30th, 2013
1:50 pm

The number is likely to be heavily revised each of the next two months. It’s not matching the other numbers that have been put up, including increased consumer spending and decreased oil imports. And if the inventory numbers are right, they’re going to pop big time in Jan-Mar quarter, so we might see a number north of 3 again for that quarter.

Not to act like I’m in denial, but sometimes a single data point is just a single data point and not a trend. An economy that’s turning downward doesn’t look like this.

Mick

January 30th, 2013
1:51 pm

frog

Yes, brilliant summation…

stands for decibels

January 30th, 2013
1:51 pm

I often hear conservatives saying “we do not want to be another Greece”.

That’s only because they aren’t laughed at and pantsed in public, like they should be, for saying such stupid stuff.

UNCLE SAMANTHA

January 30th, 2013
1:52 pm

Granny Godzilla

January 30th, 2013
1:43 pm
The Truth About Keynesian Economics — It works

http://www.forbes.com/sites/timothysiegel/2011/04/01/the-truth-about-keynesian-economics-it-works/

========================================================================

THEATER OF THE ABSURD

IF BY THAT MEASURE………. SINCE THE U.S. HAS SPENT $16 TRILLION WE DIDNT HAVE, THAT WOULD BE STIMULUS…………..SO THEREFORE WE SHOULD BE AT HIGH GROWTH AND NO DEBT………

rightwingextreme

January 30th, 2013
1:52 pm

barking frog

January 30th, 2013
1:49 pm
More jobs, less war and all will be o.k.

Jay just blamed the decline in GDP on less defense spending and you’re calling for less war….which is it going to be? Can’t have both.

getalife

January 30th, 2013
1:52 pm

The market is not dropping because the rest of the numbers are looking good.

UNCLE SAMANTHA

January 30th, 2013
1:53 pm

WE DONT WANT TO BE ANOTHER JAPAN

ByteMe - Got ilk?

January 30th, 2013
1:53 pm

IF BY THAT MEASURE………. SINCE THE U.S. HAS SPENT $16 TRILLION WE DIDNT HAVE, THAT WOULD BE STIMULUS…………..SO THEREFORE WE SHOULD BE AT HIGH GROWTH AND NO DEBT………

That $16T DID goose the economy for nearly 30 years, but the economy is getting too big for it, so it’s having a smaller and smaller effect.

rightwingextreme

January 30th, 2013
1:55 pm

stands for decibels

January 30th, 2013
1:51 pm
I often hear conservatives saying “we do not want to be another Greece”.

That’s only because they aren’t laughed at and pantsed in public, like they should be, for saying such stupid stuff.

Go to Greece where they’ve had rioting in the streets and we’ll see whose laughing.

I notice you ignore the salient points of my argument. Take these away and Greece will look like a picnic.

ByteMe - Got ilk?

January 30th, 2013
1:55 pm

Jay just blamed the decline in GDP on less defense spending and you’re calling for less war….which is it going to be? Can’t have both.

Remember that GDP is measured as a “change” in the gross economic output. So if that money that was pulled out in the fourth quarter actually stays out and doesn’t come back, it won’t change GDP going forward (except for the ripple effect on employees of those firms not getting that extra cash from the government teet). So, yes, a slow decline in defense spending — which then frees that money to be used for something else — is not a bad thing in the long run.

Jefferson

January 30th, 2013
1:56 pm

I laugh in the general direction of the right wing girs.

TBone

January 30th, 2013
1:56 pm

You’re right this is damn good news. Everything is coming up rainbows and unicorns with our skeet shooter in chief since he began his regime. So I am all on board now with more of this quantitaive easing and business friendly policies. We just can’t miss, it seems.

ken

January 30th, 2013
1:56 pm

All the Democrats that I know said that when Obama wins the economy was goning to take off. What happened ? I guess that taxes got in the way. And more to come. Enjoy !!

the cat

January 30th, 2013
1:56 pm

erwin’s cat-I’m not bashing Christians, I am bashing “christians” see if you can figure out the difference while you stroke your “gun”

barking frog

January 30th, 2013
1:56 pm

rightwingextreme
explaining is not blaming…..but I will take less war anyway.

Find Muck

January 30th, 2013
1:57 pm

I think Occupy White House said it best

“this country is in deep deep doo doo”

King of Planet Kolob

January 30th, 2013
1:57 pm

GoP was never serious about spending or else they would have improved the budget surplus that Clinton left. They want to tank the economy as a mean of regaining power.

ByteMe - Got ilk?

January 30th, 2013
1:58 pm

Go to Greece where they’ve had rioting in the streets and we’ll see whose laughing.

Last I checked, we don’t base our economic numbers by measuring rioters.

UNCLE SAMANTHA

January 30th, 2013
1:58 pm

East Cobb RINO, Inc (LLC)

January 30th, 2013
1:43 pm
I often hear conservatives saying “we do not want to be another Greece”. Sure Greece had a debt problem but it only got worse when austerity measures were forced on them. I would like to see a smaller spending budget, but it must be gradual and only as the public sector continues to grow.

========================================================================

THEATER OF THE ABSURD 2

GREECE’S PROBLEM WAS THEY DIDN’T SPEND MORE!!!!!!!!

=================================================================

the reason the USA in the past has always rebounded at high growth levels after recessions is that we have always FELT THE PAIN……….. and let the markets correct with winners and losers………….. but after this one we tried a SOFT LANDING with NO PAIN and we are destined to have a LOST DECADE like JAPAN who took the SAME ACTIONS after their events in the 1990s

getalife

January 30th, 2013
1:58 pm

Again, if your own party is calling you stupid, it is time for self reflection and change.

rightwingextreme

January 30th, 2013
1:58 pm

barking frog

January 30th, 2013
1:56 pm
rightwingextreme
explaining is not blaming…..but I will take less war anyway.

I’ll agree with less war.

Erwin's cat

January 30th, 2013
1:58 pm

see if you can figure out the difference while you stroke your “gun”

my “gun” has a name and it’s name is Karma

Drudge

January 30th, 2013
1:59 pm

Good God, we are done. Seriously, I am listening to people argue that up is down, down is up, left is right, right is left. Can anyone at least agree, in principle, that spending at a rate that outstrips the ability of the economy to keep pace is not a good thing? Or, as I am reading above, this is actually a good thing. Oh, and green means stop, red means go.

barking frog

January 30th, 2013
1:59 pm

rightwingextreme
Do not fear about less war, the oil wars will continue in
Africa as we become more involved in Mali…..

rightwingextreme

January 30th, 2013
1:59 pm

ByteMe – Got ilk?

January 30th, 2013
1:58 pm
Go to Greece where they’ve had rioting in the streets and we’ll see whose laughing.

Last I checked, we don’t base our economic numbers by measuring rioters.

uhhh…never made that claim. go back and read my posts and you might understand.

Drudge

January 30th, 2013
2:01 pm

PS – California, Illinois, New York, Michigan, Nevada, etc – things are going great under their Democratic leadership. Forward.

Christian Conservative

January 30th, 2013
2:02 pm

Its still George Bush’s fault….

ATL Tiger

January 30th, 2013
2:05 pm

“GoP was never serious about spending or else they would have improved the budget surplus that Clinton left. They want to tank the economy as a mean of regaining power”

True that the GOP spent way too much money when they had control from 2001-2005, however the Dems took control of Congress in 2007 and the economy tanked in 2008 and hasn’t been back pre Wall St collapse since.

rightwingextreme

January 30th, 2013
2:05 pm

Drudge

January 30th, 2013
2:01 pm
PS – California, Illinois, New York, Michigan, Nevada, etc – things are going great under their Democratic leadership. Forward.

Maybe Detroit needs to just spend more!!!! bahahahahahahahahah I love liberal logic!