Wednesday, January 30, 2013

U.S. Economic Contraction Hits Economy

By Grant de Graf

The contraction of the U.S. economy in the last quarter of 2012 comes as little surprise.

The nation's gross domestic product shrank for the first time in 3 1/2 years during the fourth quarter, declining at an annual rate of 0.1% between October and December, the Commerce Department said Wednesday.

Although one can expect GDP to adopt a more positive track, growth is bound to be constrained. Additionally, the possibility of a European fallout remains possible and there no evidence of any initiative which may spur growth in the U.S.

At best, it will remain lackluster and while there is always room for a surprise, no one is buying tickets for the show.

Real estate could always make a comeback, but there still needs to be an improvement in core economic growth for any sustained solid recovery.

To realize solid growth and to circumvent the dangers which face the economy in respect to the fiscal cliff debate, the U.S. needs a national blueprint, supported by both Democrats and Republicans, which will facilitate the high levels of business expansion which the economy needs.

Economist John Mauldin joins WSJ's Markets Hub with an outlook on the U.S. economy, and his take on the Federal Reserve's effect on the stock market. Photo: Getty Images.

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