The World Economic Outlook Is not Good for 2013

The US economy unexpectedly shrank in the fourth quarter 2012 according to government statistics - for the first time since 2009, probably because of the biggest cut in defense spending in 40 years, fewer exports to Europe and China and sluggish growth in company stockpiles. The drop occurred despite stronger consumer spending and business investment. Economists said that things aren't as bad as it seems, because of the areas that caused the GDP drop. Government spending cuts and slower inventory growth, which can be volatile, subtracted a total of 2.6 percentage points from GDP. The Social Security increased withholding has also left consumers with less take-home pay. Exports fell by the most in four years, a result of Europe's recession and slower growth in China and some other large developing countries. But the fact that the economy shrank at all, combined with much lower consumer confidence reported Tuesday, may cause concerns about the economy's health in 2013. Dear readers, no matter how positive is the spin being put on the US GDP negative figure, the news cannot be taken lightly. First, the predicted result of failure to stop the across the board cuts in the US federal budget are real. Second, the drop in US exports to Europe and China are strong indications that these two regions are not doing well. In Europe's case, the recession and economic retraction continue. In China's case, despite the spin being used by the Chinese government, the Chinese economy and market are slowing down. That leaves only the American private sector and American consumers to pull the world out of the economic malaise that started in 2008. Even if they succeed, the rest of 2013 may be unpleasant.