National economy shrinks in fourth quarter
Defense spending plunges, but may not be bad portent for San Diego
The U.S. economy declined in the fourth quarter for the first time since the Great Recession, as growth inched down at a 0.1% annual rate. For the full 2012, the economy grew 2.2% versus 1.8% in 2011 and 2.4% in 2010 -- too tepid to stimulate employment significantly, but perfect for Wall Street, because the Federal Reserve has an excuse to keep pushing interest rates down, despite their extremely low levels.
In the fourth quarter, military spending plummeted 22.2%, although it had zoomed 12.9% in the third quarter. Some local economists believe cuts in defense spending will hurt San Diego this year. Home building was up in the fourth quarter. Military and housing constitute a large percentage of the San Diego economy. Yesterday (Jan. 29), the Standard & Poor's/Case-Shiller home price index showed San Diego County values rising 0.9% in November from October, sharply higher than most of the largest 20 metro areas. Year-over-year, the local increase was 8%, topping gains in most other cities. Many economists expect a big housing rebound sparked by the low interest rates, but Yale's Robert J. Shiller, one of the designers of the index, isn't counting on a boom.