Dwarf Spruce tree is shedding its needles
This shrub is native to Canada and the N. U.S. It grows best in full sun and moist soils but not wet ones. It does not like a lot of stress. Reasons for branch dieback and needle loss includes poor drainage and/or spider mites, a sucking insect. You can look for this. http://extension.umd.edu/hgic/spider-mites-trees-and-shrubs
The spruce spider mite is a cool season mite that feeds in the fall and spring during cooler temperatures. A simple technique for sampling, (especially conifers) is to tap a few terminals or leaves over a piece of white paper. Wait a few seconds and watch for movement. The mites may take a short time before they begin crawling on the paper. If you notice this, you can hose the shrub down with a forceful spray of water.