NEW YORK, Jan 30 (Reuters) - The U.S. economy unexpectedly contracted in the fourth quarter, suffering its first decline since the 2007-09 recession as businesses scaled back on restocking and government spending plunged.

Gross domestic product fell at a 0.1 percent annual rate after growing at a 3.1 percent clip in the third quarter, the Commerce Department said on Wednesday.

That was the worst performance since the second quarter of 2009, when the recession ended, and showed the economy entering the new year with no momentum

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WAYNE KAUFMAN, CHIEF MARKET ANALYST AT JOHN THOMAS FINANCIAL IN NEW YORK

'It is a little bit of a surprise, and I'm trying to figure out why it contracted. I would've expected it to be higher, obviously so did the survey. This is one chink in the armor of the recent better-than-expected economic indicators. This will make people start to get wary. But if it turns out that Sandy and the fiscal cliff were the reasons for this, people will shrug it off.'

MARKET REACTION:

BONDS: U.S. bond prices jumped higher

(Americas Economics and Markets Desk; +1-646 223-6300)

Keywords: USA ECONOMY/INSTANT

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