US GDP shrinks slightly (0.1%)

First, a small footnote to the US GDP contraction: If you look at the data reported, the seasonally-adjusted, whole-year GDP for Q4-2012 grew 0.5%.  But adjusted for inflation, it shrank 0.1%.

Okay, now that we got that out of the way, what dragged down the US GDP?  Mostly defense spending (-22.2% from the preceding quarter), but gross private domestic investment was also down (-0.6%).

Because consumer spending was up, and because the defense spending drop was considered to be one-time items, most economists think this negative GDP wasn't all that bad, and isn't a sign of an oncoming recession.  But -- again, you knew a but was coming -- we have just one problem, and that is that the sequester cuts that were kicked down the road for a couple of months, may yet slash defense and discretionary spending.

Again, this points to the fact that total GDP  = total GDP.  No matter how much conservatives want to poo-poo government GDP, the fact of the matter is, government spending, if cut drastically, is damaging; it'd be similar to the credit contraction that caused the 2008 recession.

Or we could have the Republican Balanced Budget Amendment and its de facto equivalent of the debt ceiling.

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Update: Leaving no hypocrisy unturned, Republicans have used this GDP contraction (due to lower government spending) to mock President Obama.

Let me restate: Republicans are suggesting that the drop in GDP, because of lower government spending, is bad.

[scratching head]