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Reversal of economic recovery?

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    Commerce Department says economy has shrunk

  • Duration 2:36
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-- -- -- a hard slap in the face tonight from reality.

An economy thought to be improving shocked experts today and shrank in the final three months of last year.

That is a huge falloff from gains over last summer White House correspondent Wendell Goler with an explanation and reaction.

It.

The less than two weeks after the president said in his second inaugural address that an economic recovery had begun the Commerce Department said not so fast.

The biggest drop in defense spending in forty years combined with a decline in exports.

And slow growth and company stockpiles slashed economic growth from three point 1% in the third quarter.

The minus 110 of a percent in the fourth.

The first negative quarter since 2009.

At the White House both downplayed the report and gave Republicans part of the blame.

Home prices are starting to climb back.

Consumer confidence -- -- has been rising and consumer spending has been rising.

But there's more work to do and our economy is facing a major -- which -- to your point and that's Republicans in congress.

This -- cited comments by house speaker John Boehner about using the threat of across the board spending cuts known as the sequester as leverage for fiscal austerity.

And an unnamed Republican leadership aide who reportedly set a government shutdown might show some members constituents they're fighting and inflicting damage on the economy.

As.

To achieve some.

Political rules here in Washington simply -- very bad idea -- accused Republicans of pushing spending cuts for their own -- but Senate Minority Leader Mitch McConnell I denied that this is ultimately conversation about growth.

And opportunity.

It's not a conversation about -- Republicans say a deal that convinces the public congress is writing the fiscal ship would stimulate more buying.

-- economists say the payroll tax hike that people felt this year may slow the current -- world where -- -- gonna have an impact.

Is likely on retail sales in January February.

Fiscal coming up a soft as people start to respond.

To the fact that their income is -- I thought it was going to be Nigel Gault says the latest GDP report.

Doesn't suggest the trend but taking the last two reports together gives -- clearer picture of the economy averaged -- -- Where around one and a half percent -- -- -- that's the the underlying pace we were showing in the second half of the year and it's it's a recovery but itself.

-- says most private spending categories like housing for example actually did better in the fourth quarter then the third he expects positive growth this year.

And not a slide into recession.

Undergo a lot of the north -- Wendell thanks.

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