Defense Cuts Starting to Pinch Economy

July 4, 2012

Tighter defense budgets are starting to pinch the nation's economy, slowing a sluggish recovery even before sharper spending cuts could kick in next year.

Military defense spending fell by about $12 billion, or 3%, from October through May compared with the same period in the previous federal budget year, according to the Congressional Budget Office.

The Bureau of Economic Analysis, which measures defense-related spending more broadly, said last week that weaker defense spending shaved half a percentage point off first-quarter growth. Instead of growing 2.4%, the economy grew 1.9%. 

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