U.S. Economy Shrinks Slightly

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NEW YORK (CNNMoney) — Uncle Sam cut spending in the fourth quarter of 2012, causing the U.S. economy to contract for the first time in more than three years.

Gross domestic product, the broadest measure of the nation’s economic growth, contracted at an annual rate of 0.1% from October to December, the Commerce Department said Wednesday. It was the first quarterly contraction since the second quarter of 2009, amid the Great Recession.

The contraction was due to cuts in federal spending, primarily on defense. Defense spending contracted at a 22% annual rate.

Weaker U.S. exports and a contraction in spending on commercial buildings also weighed on economic growth, more than canceling out strong consumer spending.

Consumer spending makes up the largest part of the U.S. economy and accelerated at a 2.2% annual rate in the fourth quarter.

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