The White House says Superstorm Sandy is partially to blame for the unexpected contraction of the U.S. economy.
Top White House economist Alan Krueger says the storm, which battered the East Coast, disrupted economic activity and destroyed $44 billion in fixed capital. Krueger also says federal defense spending shrank, in part because of uncertainty over automatic spending cuts that could have kicked in at the start of the year.
President Barack Obama and Congress reached a deal to push off the spending cuts - known as the sequester - for two more months.
The Commerce Department said Wednesday that the economy contracted at an annual rate of 0.1 percent in the fourth quarter. It's the first time the economy shrank since 2009.