Surprise Q4 fall in US GDP

The US economy unexpectedly contracted in the fourth quarter of last year as businesses scaled back on restocking and government spending plunged.

Gross domestic product fell at a 0.1 percent annual rate, in contrast to the previous quarter when it grew 3.1 percent.

Even though this was the first decline since the 2007-09 recession, there was some good news with a pick-up in consumer spending and a rebound in business investment.

Still for policymakers, like those at the US central bank the Federal Reserve, the contraction could spur fears of a new recession.

The fact that the whole of last year the US economy grew by just 2.2 percent will certainly play into decisions from the two-day Fed meeting just wrapping up.

The report makes it more likely that Fed Chairman Ben Bernanke and the other decision makers will continue stimulating the US economy.

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