Chart of the Day
Posted at 1 p.m. on Jan. 30
– One of the largest drivers of the estimated contraction of fourth quarter GDP was defense spending, which “plunged by a staggering 22.2 percent between October and December,” according to this chart from Brad Plumer. So what happened?
“Defense spending often rises in the third quarter of a year and drops in the fourth quarter… There’s a reason for this pattern. The fiscal year ends in September, and government agencies typically try to spend all the money Congress allotted them for that year by then — otherwise, they fear, they’ll get a smaller budget next time around.”
“One possible explanation…was that the Pentagon had been preparing for the sequester budget cuts that had originally been scheduled for January.