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ARE WE THERE YET? Defense Cuts Stall Economic Growth Store clerk in East Aurora, N.Y. on Feb. 25. (David Duprey/AP)

Defense Cuts Stall Economic Growth

New government data released Friday proves the economy is alive—but not quite kicking. The report shows that the gross domestic product grew at an annual rate of 2.5 percent during the first three months, a number that economists worry may be a sign of a soon-to-be stalled economy. Officials blame an 11.5 percent annual drop-off in military spending—a product of ending the wars in Iraq and Afghanistan—for the slowed growth. Combined with another even larger cut in military spending last year, it’s the most drastic drop in defense expenditures America has seen since the Korean War. The slowdown is simply another product of the infamous sequester, experts say, which is expected to cut half a percentage point off this year's growth.

April 27, 2013 11:07 AM