The U.S. Economy Is Shrinking: Now Is the Time to Worry

AFL-CIO Now

01/31/2013 William Spriggs

Photo courtesy of Wikimedia commons.

MAD magazine’s Alfred E. Neuman was always shown with a grin on his face, captioned, “What, me worry?” Well, now it is time to worry.

The release of the advanced GDP numbers—measuring all goods and services produced in the United States—for the past three-month period of 2012, shows the economy shrinking. Why? Well, personal consumption—all those Christmas gifts—grew by 2.2%, a growth rate faster than in the preceding quarter. Non-residential fixed investment, what businesses are buying to increase their economic activity going forward, jumped by 8.8%, almost six times faster than in the preceding quarter, and imports dropped significantly (a drain on the system, since that is money going abroad), so that the net effect of exports and imports was a boost of 5.7% to the economy. So, if people are buying more, business is investing more and imports aren’t sucking the wind out of the economy’s sails, where did we go wrong? Federal expenditures plummeted by 15%. The big chunk of the drop from federal expenditures came in defense expenditures. Continue reading “The U.S. Economy Is Shrinking: Now Is the Time to Worry”