For an election that was supposed to be a referendum on the economy, it’s kind of amusing how the latest statistics on economic growth fit neatly into the narratives being pushed by both campaigns.
The government’s first estimate of GDP growth for the third quarter of 2012 came in at a rate of 2.0 percent. That’s better than the second quarter’s final number: 1.3 percent. Yay! But it’s not fast enough to significantly bring down unemployment. Boo!
It is, as White House chief economist Alan Krueger asserted, “further evidence that the economy is moving in the right direction.” Yay! No recession, at least not this year. But it is also disappointing, as Mitt Romney was quick to note: ” Slow economic growth means slow job growth.” Boo.
There wasn’t much inside the report that we didn’t already know. Improvement in the housing sector and reasonably robust consumer spending contributed to growth. A sharp decline in business investment — likely attributable to uncertainty about the fiscal cliff — and a downturn in exports (slowdown in China, European recession) detracted from growth.
The main surprise was a burst of government spending, mostly on defense. Who could have imagined it — government spending contributes to economic growth! But with the fiscal cliff looming, government spending is certainly not a factor that can be counted on in the months ahead, which means that other sectors of the economy will have to grow faster just to maintain the current trendline.
Bottom line — the bottom is not falling out of the economy. For Obama, that’s reasonably good news — if only because today’s reading is the last we’re going to get on economic growth before the election.