Subshell quoting to preserve spacing and the newline character

Suppose we are assigning the output of a command to a variable using a subshell or the back quotes method, we must use double quotes to preserve the spacing and the newline character (\n). Consider this example:

$ cat text.txt
1
2
3

$ out=$(cat text.txt)
$ echo $out
1 2 3 # Lost \n spacing in 1,2,3

$ out="$(cat text.txt)"
$ echo $out
1
2
3