It's Spring! Time for Another Slump for the U.S. Economy

It’s as if the economy is trapped on some sort of cosmic hamster wheel. For the fourth year running, the U.S. is experiencing a spring slowdown, with job growth, retail sales, and manufacturing output all falling. The only solace this time around is that economists saw it coming.

The failure of the White House and Congress to avert automatic spending cuts has contributed to the biggest federal-budget tightening in more than 60 years. That’s the big culprit behind the slump—rather than fears of a potential breakup of the euro zone or a hard landing for China’s economy. “There definitely has been a slowdown in the past month,” says Russ Koesterich, global chief investment strategist at BlackRock, the world’s largest money manager. “I don’t think it’s going to be as dramatic or necessarily as frightening as some of the ones we had back in ’10, ’11, and ’12, which were really exacerbated by a lot of geopolitical issues.”