Economy Contracts for First Time in 3½ Years on Defense-Spending Cuts

NewsMax ^ | 30 Jan 13 | None listed

[SkyPilot]

The U.S. economy unexpectedly shrank from October through December for the first time since 2009, hurt by the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles. The drop occurred despite stronger consumer spending and business investment.

The Commerce Department said Wednesday that the economy contracted at an annual rate of 0.1 percent in the fourth quarter. That was a sharp slowdown from the 3.1 percent growth rate in the July-September quarter.

Economists said the drop in gross domestic product wasn't as bleak as it looked. The weakness was mainly the result of one-time factors. Government spending cuts and slower inventory growth, which can be volatile, subtracted a total of 2.6 percentage points from GDP.

But the fact that the economy shrank at all, combined with much lower consumer confidence reported Tuesday, may raise fears about the economy's durability in 2013. That's because deep automatic government spending cuts will cut into domestic and defense programs starting in March unless Congress reaches a deal to avert them.

And Americans are coming to grips with an increase in Social Security taxes that has begun to leave them with less take-home pay.

Still, the government spending cuts and slack inventory growth in the fourth quarter offset a 2.2 percent increase in consumer spending. And business spending on equipment and software rose after shrinking over the summer.

Consumer spending added 1.5 percentage points to GDP, and business investment added 1.1 points — both stronger contributions than in the third quarter.

"Frankly, this is the best-looking contraction in U.S. GDP you'll ever see," Paul Ashworth, an economist at Capital Economics, said in a note to clients. "The drag from defense spending and inventories is a one-off. The rest of the report is all encouraging."

[familyop]

Might consider starting some manufacturing plants in the Springs. Make some useful products. ;-)

[SkyPilot]

We need manufacturing. We need engineering. We need research.

The problem is, our economy these days is largely driven by liberal wack jobs.

I know a man whose daughter graduated from law school. She took a job with a law firm whose sole purpose for existence is to sue doctors for medical malpractice. She even had a "cutsie" name for it: "Med Mal." All the lawyers use the term. It made me sick hearing the conversations.

I know a man whose son is an Aerospace engineer. He went to one of the finest engineering schools in the nation and graduated at near the top of his class. He has been looking for a job for 3 years. He has only found menial part time jobs, and is currently working as a lifeguard.

Our economy used to make things. During WW II we were the arsenal of Democracy.

Go to any strip mall in America today - what do you see? Decay. Broken dreams. Decline.

It it wasn't for the Food Stamps, unemployment checks, and Social Security checks, entire areas of the nation would look like the Somalia. Perhaps even worse.

We need to move forward on what is best and strongest about America. Abandoning our military, which is already suffering under duress, is not the answer. Killing off the defense industry won't do us any good either. Punishing the thousands of employees at the Dept of Defense hurts the hard working patriots. Slapping our veterans and military families in the face is an obscenity.

Today, I read that the one Socialist in Congress, Bernie Saunders, is now slamming sequestration and what it will do to our veterans.

Sequestration could hurt veterans, Bernie Sanders says

We have a $%^*&* Socialist out there speaking up for our veterans and military, and Paul Ryan and John Boehner are saying throw them to the wolves of Sequestration? What.......the.....hell? Is anyone awake at GOP headquarters?

[Claud]

D’Tocqueville’s position on this is interesting. He basically said that tyrannies always have the advantage at the beginning of war, as they are able to mobilize a huge military quickly. Democracies always suffer, because they are geared toward commerce and avoid war if possible. BUT as the conflict drags on, and as the democracy throws its energy into war, it can far outstrip a tyranny that exhausts and depletes its citizenry. That sounds exactly like how we won WWII.

Historically it hasn’t been a huge problem being a little off our game at the beginning of a conflict and then ramping up as we need to. But is this even possible in a nuclear age? I dunno.

Tell ya what though, what is COMPLETELY asinine is cutting back on the military AND disarming the citizenry. That is just plain nuts.

[clearcarbon]

After decades of lib claims that money wasted on defense was better spent on social programs, we finally have a clear example of how much better their social benefits concept works.