Editore"s Note
Tilting at Windmills

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November 23, 2010

U.S. ECONOMIC GROWTH SLIGHTLY STRONGER THAN EXPECTED.... About a month ago, the initial estimate for third quarter economic growth, covering July through September, showed the U.S. economy expanding at 2%. Today, that number was revised in an encouraging direction, but we still clearly need to do much better.

Gross domestic product growth was revised up to an annualized rate of 2.5 percent from 2.0 percent as exports, and consumer and government spending were stronger than initially thought, the Commerce Department said in its second estimate.

Economists had expected GDP growth, which measures total goods and services output within U.S. borders, to be revised up to a 2.4 percent pace.

By any measure, better growth is good news. The third quarter was better than the second, and consumer spending was stronger in July through September than at any point in four years. We've now had five consecutive quarters of economic growth, which, given the severity of the Great Recession that began in 2007, is a streak we haven't seen in a while. Inflation, not surprisingly, is still nowhere to be found.

But the fact remains that 2.5% growth still isn't close to what we need for a robust economic recovery, nor is it enough to start making a serious dent in the unemployment rate.

Ideally, policymakers would see a report like this and conclude it's necessary to give the economy another boost, but that's proven problematic. The Fed is making an effort, but Republicans are blasting Bernanke for trying. What's more, an emboldened GOP, with its incoming House majority, opposes any and all stimulus efforts, intends to cut off stimulative unemployment benefits, rejects the single most effective jobs program of the last two years (the TANF Emergency Fund), and expects to fight aggressively to take more money out of the economy in the form of harsh budget cuts.

And with that, here's another home-made chart, showing GDP numbers by quarter since the Great Recession began. The red columns show the economy under the Bush administration; the blue columns show the economy under the Obama administration.


Steve Benen 9:15 AM Permalink | Trackbacks | Comments (5)

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We have chronically unemployed remaining from the great recession. Slow growth is good in good times, but it isn't good enouhg in these. I have family members who have had a hard time finding work. I know a lot of 20-30 somethings who have moved their families back home with their folks. At the same time I no a lot of 50-65 year olds who have lost their jobs, homes and hope. They are living with friends and their kids. The employed in the middle are being pushed by their children and their parents. Steve, our society is changing. Our definition of family is changing. Nobody seems to notice.

My friends in the housing industry are still trying to make a go in a tough market dominated by forclosures. I guess Walmart is still selling a lot of made in China by slaves trade trinkets.

So far I have heard nothing out for the Republicans and not much out of the Democrats as to how we are going to solve our chronic unemployment problems

Posted by: Ron Byers on November 23, 2010 at 9:40 AM | PERMALINK

Not to sound too melodramatic (if that is possible in this place and time), but I do believe we are at some kind of turning point. What will emerge from the wreckage that the Reagan Revolution has created? I guess that depends on those of us who try to move this country forward with all of the intelligence and courage we can summon.

It is hard to admit that we have arrived at a crossroads where the future of this country, and perhaps the world, hangs so precariously in the balance.

Our (or at least my) initial reaction is that, after everything we have learned in the past few centuries, we should not be here again, staring into the abyss. Yet here we are. I take comfort in the knowledge that we have been here so many times before. One occasion that comes to mind for me is the onset of World War I, when, inspite of having achieved artistic and scientific progress that prior generations could not have imagined, humanity stumbled into a nightmare that was beyond description. We somehow emerged from that conflict and created a world that was better in some ways and worse in others. William Butler Yeats wrote "The Second Coming" in 1919 as a reaction to the First World War. Although it was written nearly one hundred years ago, I think it captures the tone of our times pretty well:

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: a waste of desert sand;
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Wind shadows of the indignant desert birds.
The darkness drops again but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?

Posted by: broken arrow on November 23, 2010 at 10:12 AM | PERMALINK

@Ron: Well said. Dealing with this mess, this horror of a recession, was not going to be easy. How anyone expected Obama to fix everything in two seconds or less, when he clearly informed us that it would take much longer, is beyond me.

We seem to have forgotten that it was Bush II and company that drove us off the damned cliff. And yet, his name is absent--all I seem to hear now from progressives is how this is all Clinton's fault.

As to the poem--thanks for this. Some time ago, I spoke to a friend who grew up during the Great Depression. I was sad and angry and unemployed, but he reminded me that back then, things were a hell of lot worse--those of us alive today (but born after the Depression) cannot imagine it. His words to me? "All of this shall pass."

We'll get through this; there will be a tomorrow. Won't be easy, but if there is a silver lining, it's that the Reagan Revolution will be tossed onto the trashpile of history.

Posted by: Marc McKenzie on November 23, 2010 at 11:59 AM | PERMALINK

We are living at a moment where the myth of the possibility of infinite growth on a planet constrained by finite carbon reserves is being tested.

We are forced to try and grow exponentially, but are price constrained by the end of the availability of cheap fossil fuels. As our national and private debt mounts, hedged against a future where 4-6 % growth is necessary just to support the entering workforce, let alone the existing unemployed, the table has been set for drastic events.

We are caught in a catch-22 on multiple fronts. Putting a price on carbon will slow growth, yet growth is required to service our debts. We need cheap energy to continue to grow, yet access to cheap(er) energy requires the full force of our military industrial complex, which serves to increase terrorism, and make our citizens less safe.

The reality is we have hit our limits. Congress is gridlocked simply trying to maintain an unsustainable status quo, and the President is unable to articulate a clear vision out of what is a huge mess. It will not be pretty from here on out.

Posted by: Kevin on November 23, 2010 at 2:52 PM | PERMALINK

The continued acceleration in real GDP primarily reflected a reduction in imports of goods, for which a reduction is an increase in GDP. Who needs those pesky Chinese imports anyway.
Edward from funginix

Posted by: Edward Johnson on November 24, 2010 at 7:47 AM | PERMALINK



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