PERRspectives: Public Sector Austerity Still Slowing U.S. Economy
"All along, the real danger of the so-called "fiscal cliff" wasn't that U.S. national debt would increase, but instead that it would drop too quickly. Now, the surprise news that the American economy contracted by 0.1 percent in the last quarter of 2012 is providing a case in point. Along with the impact of super storm Sandy, declining exports and shrinking inventories, steeps cuts in federal (especially defense) spending explain much of the shortfall from the consensus forecast of 1.1 percent growth. As it turns out, since the start of the great recession the unprecedented shrinkage of the U.S. public sector has hampered economic growth and likely added a full point to the unemployment rate."
