After initially reporting that U.S. gross domestic product (GDP) had decreased 0.1% in the fourth quarter of 2012, the government issued revised data showing it had actually grown by 0.1%. For the year, GDP increased by 2.2%, an improvement from 2011's 1.8%.
The minor adjustment was driven largely by better performance on exports than originally reported. Still, the big player in the quarter was a sharp downturn in federal government spending (-14.8%).
As Congress and President Obama edge up to the sequester, notes James Marple, senior economist with TD Economics, "there is a high probability that government spending cuts will continue to pose a significant drag on economic growth, and that the impact will be staggered as the year rolls forward. While private sector growth will be supported by the ongoing housing rebound, the net result is likely to be annual real GDP growth that is held under 2.0%, slightly below the average pace of growth in the recovery to date."