The economy contracted at an annual rate of 0.1 percent in the last three months of 2012, the worst quarter since the economy crawled out of the last recession, hampered by the lower military spending, fewer exports and smaller business stockpiles, preliminary government figures indicated on Wednesday. The Fed, in a separate appraisal, said economic activity “paused in recent months.”
Still, economists said the seemingly bleak gross domestic product report was not a sign that another recession was looming. The preliminary data showed relatively strong spending by consumers and businesses, even as military spending posted its sharpest quarterly drop in 40 years.
Forecasters expect that growth this year will rebound to a still-anemic 1.5 percent, a little lower than the pace it has managed over the last three years.Soooo, that's not good news. That said, my morning Wonkbook e-mail was full of people telling me this was due to a blip in defense spending, a statistical fluke, etc., etc. I can believe that, but here's what I want to know -- if we're in a recovery, why are GDP predictions for 2013 lower than 2012?