By Phillip Inman and Dominic Rushe, The Guardian, Jan. 30, 2013

Surprise drop in growth due to defence cuts and fiscal cliff, though jobs, housing and construction all improve

[....] Cuts in government spending sent the economy into reverse following a 3.1% annualised increase in GDP in the third quarter. Government spending fell by 15%, dragged down by a 22% cut in defence spending, the biggest fall since 1972 and the end of the Vietnam war. Private companies cut back orders to reduce their stocks after a spree in the previous quarter and a decline in exports.

The surprise contraction came ahead of the release of the latest official jobs figures on Friday. Unemployment has been steadily, if slowly, declining in recent months. [....]

Some economists warned against reading too much into the report. "Frankly, this is the best-looking contraction in US GDP you'll ever see," Paul Ashworth, an economist at Capital Economics, said in a note to clients. "The drag from defence spending and inventories is a one-off. The rest of the report is all encouraging."[....]