WASHINGTON -- The U.S. economy shrank at a 0.1% annualized rate in the last three months of 2012 amid fears about the fiscal cliff, the Commerce Department reported Wednesday.
It was the first time economic growth contracted since the end of the Great Recession in mid-2009 and showed how much the concerns about large tax hikes and federal spending cuts weighed on businesses as last year drew to a close.
A last-minute deal in Washington averted most of the tax increases and delayed the automatic spending cuts. Economists say they believe that will lead to economic growth in the first three months of 2013.
But Thursday's report -- the government's first estimate of fourth-quarter economic activity -- was a surprise.
Economists has projected that the gross domestic product -- the nation's total economic output -- would expand about 1% in the fourth quarter, a slowdown from the 3.1% growth in the July-through-September period.