For the first time since 2009, the U.S. economy shrank last quarter. New numbers out of the Commerce Department, show that the economy shrank in the fourth quarter of 2012 by point-1 percent. That’s a complete reversal from the robust 3.1% growth rate, which we saw in the third quarter of 2012.
What’s behind the sudden drop? Conservative austerity spending cuts. Federal spending was down 15% in the fourth quarter, after rising 9.5% in the third quarter. And as we’re seeing in the UK, which is on the verge of entering a triple-dip recession – Greece, which is on the verge of total collapse – and Spain, which has the highest unemployment rate in Europe – austerity kills economies.
But thanks to Republican hostage-taking, and demands for more and more spending cuts – the United States is about to enter this same austerity death spiral in 2013. Already – the US is scheduled to enact austerity measures totaling 2.1% of GDP – which is more austerity than the U.K., France, and Spain have enacted thus far. And with even bigger spending cuts looming in a few months, it’s only going to get worse.
We need pro-growth policies, that put money back in the hands of working people. Spending cuts don’t do that. And no nation, in the history of the world, has ever cut its way to prosperity.