US GDP contracts for first time since end of recession "It will be important for Friday's employment number to settle people's nerves that this reflect the fiscal cliff concerns rather than a genuine stalling of the US economy," said David Semmens, an economist at Standard Chartered. Even so, the first reverse for the US economy since it emerged from recession in 2009 underlines the challenges facing the recovery this year. A drop in government spending inflicted the most damage, led by a 22.2pc fall in defence spending. Exports also declined, falling at an almost 6pc annual rate. "The economy ended 2012 on a very sluggish pace, even though one-time factors put the number below the trend," said Kathy Bostjancic, an economist at the Conference Board.