Did a reduction in Defense Spending lead to a contraction in the economy?

This might end up being a lesson in the danger of quickly cutting spending. It sounds nice, but it has consequences. By the way - most, ok all, of this was stolen from Wonkblog.

The GDP shrank 0.1 % in the last quarter of 2012 even though the private sector grew.

Here's the breakdown in chart form:



And some commentary:

- Yikes! Economy shrank in fourth quarter for the first time since ’09.
- Economy shrinks as federal spending cuts trump private sector’s growth.
- Government is hurting the economy — by spending too little
- GDP Report Is Less Negative Than It Looks

And one more chart that compares the private and public components of ther economy.