People look for post-Christmas sales at a shopping mall in Los Angeles, California on December 26, 2012.
(Photo: ROBYN BECK AFP/Getty Images)
The U.S. economy posted a decline of 0.1% at an annual rate last quarter, shocking experts although there was an expectation that growth would be lower than the 3.1% gain in the third quarter, the government said Wednesday.
It's the first decline in GDP since a -0.3% decline in 2009's third quarter. The government's first estimate of GDP was off by a percentage point or billions of dollars. A survey of economists by Bloomberg had expected growth of 1% in the fourth quarter, held back by Superstorm Sandy's impact, among other factors.
Several prominent economists said this week that the number might come in above forecasts, after the government reported better-than-expected durable goods orders for December.
The economy grew 3.1% in the third quarter, 1.3% in the second and 2.0% in the first.
Growth has averaged less than 2.5% since the recession ended in mid-2009. That's below what many economists say is needed to create jobs and bring down unemployment quickly.
The government will make its January jobs report on Friday. Economists forecast the unemployment rate remained at 7.8%, unchanged from the previous two months.
The economy's prospects this quarter may hinge on how consumer spending is affected by this month's expiration of the Social Security payroll tax cut, which will reduce many Americans' take-home pay by about 2%.
A possible cautionary signal: Consumer confidence plunged in January for the third straight month, erasing all of 2012's gains, the Conference Board reported Tuesday.
Some economists are more optimistic about the full year's outlook, especially in the second half. The National Association of Business Economics said Monday that half the economists in its latest quarterly survey expect the economy to grow between 2% and 4% in 2013. Only 36% predicted that range of growth in the group's October survey.
Revised estimates for fourth-quarter GDP will be released by the Commerce Department on Feb. 28 and March 28.
Tim Mullaney, USA TODAY