U.S. Economy Unexpectedly Slows

America's gross domestic product, which expanded 3.1% in the third quarter of 2012, shrank 0.1% in the final three months of the year, according to a preliminary estimate by the Dept. of Commerce.

The U.S. economy, which grew 1.8% in 2011, expanded 2.2% in full-year 2012.

Economists opined that the October-December slowdown the first quarterly contraction since mid-2009 was mainly caused by uncertainty about the "fiscal cliff" budget crisis, which was averted temporarily on Jan. 1.

The federal government slashed spending 6.6% in the fourth quarter the biggest drop since 1973 and wary companies let inventories shrink. Those factors offset a 2.2% gain in consumer spending and an 8.4% jump in business investment.

Economists expect the U.S. economy to return to moderate growth in the current quarter, thus avoiding the two consecutive quarters of contraction that would constitute a recession.

But they warn that exports, which fell 5.7% from October through December, are likely to remain a drag on GDP. Shipments are down because of Europe's recession and slowing demand in China and other emerging markets.