The figures don't bode well for hiring in Milwaukee, where manufacturing makes up about 15 percent of the economy, according to Kurt Rankin, an economist at The PNC Financial Services Group in Pittsburgh.
"Until the nation calls on Milwaukee's manufacturers to produce more, the prospects for job growth are lessened," Rankin said.
Rankin expects weaker consumer demand in the first quarter, since the payroll tax has increased from 4.2 percent to 6.2 percent.
"Disposable income has decreased for all American workers," Rankin said. "It's not psychologically or financially something that can't be overcome by consumers."
But overcoming it will take about half the year, he expects. Manufacturers are likely to keep inventory levels low until consumer demand comes back.
The health care industry also makes up a large portion of Milwaukee's economy, and provides many of the area's high paying jobs that would drive economic growth, he said.
"The higher paying locally based jobs are still not increasing in Milwaukee and that's keeping incomes from flowing back into Milwaukee and providing growth internally," Rankin said.
Nationally, the 0.1 percent drop in gross domestic product occurred despite stronger consumer spending and business investment, according to the U.S. Department of Commerce. That was a sharp slowdown from the 3.1 percent growth rate in the July-September quarter.
It remains unclear whether the drop was a blip in the economic recovery or a reversal of directions.
Economists said the drop was mainly the result of one-time factors such as government spending cuts and slower inventory growth.
Superstorm Sandy likely also dragged on growth by closing factories, disrupting shipping and shutting down retail stores.