Editore"s Note
Tilting at Windmills

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January 28, 2011

ECONOMY SHOWS SIGNS OF LIFE.... Economic activity in last three months of 2010 didn't quite meet expectations, but it came close, and the result is a GDP report most will find heartening.

The United States economy sped up its growth rate in the fourth quarter, though slightly less than expected, chiefly on the backs of revitalized consumers and a narrowed trade deficit.

Gross domestic product, a broad measure of all the goods and services produced by the economy, grew at an annual rate of 3.2 percent in the fourth quarter, up from 2.6 percent in the previous period, according to the Commerce Department.

In terms of the larger context, we've now seen six consecutive quarters of economic growth. What's more, the trend has been moving in the right direction -- the third quarter was better than the second, and the fourth was better than the third.

And before Republicans start taking credit for the growing economy -- as we've seen lately, they really enjoy doing this -- it's worth noting that the tax policy agreement reached with the White House wasn't signed until the end of the quarter, and hadn't taken effect when the economy picked up.

Also note, while better growth is obviously good news, 3.2% is still only modest growth. Under normal circumstances, this would point to a fairly healthy economy, humming right along. But given the severity of the Great Recession, our circumstances are anything but normal -- to have a robust recovery and make a real dent in the unemployment rate, we'll still need to do better than this.

Accelerating growth is encouraging, but if you hear policymakers and pundits today use this as an excuse to justify hitting the brakes, please know that they're completely wrong. We're slowly getting out of a ditch -- pursuing massive budget cuts, taking money out of the economy, and deliberately putting people out of work (i.e., the vision embraced by House Republicans) would very likely push us backwards in a hurry.

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 9:10 AM Permalink | Trackbacks | Comments (6)

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It would be refreshing to redefine the word "economy" to mean the economic well being of the population-at-large. These numbers are misleading. If one person makes a billion and 10 go into poverty, there could still be "growth."

Posted by: Tommybones on January 28, 2011 at 9:17 AM | PERMALINK

Well of course the Republicans were responsible!

Big business knew they would win the House, and so started kicking into gear. They had waited sooooooo long!
Oh, if only they had the Senate, and 2010 was also a Presidential election year, we'd be waking up in a veritable economic Shangri La this morning!

Posted by: c u n d gulag on January 28, 2011 at 9:18 AM | PERMALINK

This is encouraging data, but how will it play when the FOXNEWS micromanagement-cultural-perception filter (MCPF) is placed over the reality-based information and fed to its audience of unassuming (non-reading) Americans? -Kevo

Posted by: kevo on January 28, 2011 at 9:25 AM | PERMALINK

GDP growth, yet a spike in unemployment applications. At some point, the public will have to address that disconnect.

The labor force needs to re-tool, and the wealthy will have to pay for it. The smart ones are OK with this, as they know that they will recoup the payment (with interest) through true economic recovery.

Posted by: bdop4 on January 28, 2011 at 9:28 AM | PERMALINK

I think the GOP actually believe fiscal policy has no effect on economic growth, therefore it is always just the passage of time that heals the economy; therefore any politician taking credit for economic recovery is dishonest, and since democrats try to take credit for what, through Republican eyss they don't deserve credit, Republicans must get in the game and claim credit as well. This is actually scary. Part of the overarching anti intellectualism of the GOP.

Posted by: Johnny Canuck on January 28, 2011 at 10:18 AM | PERMALINK

Now that stimulus funds for infrastructure and aid to state and local governments is ending, I will be very curious how next quarter's numbers stack up.

Posted by: Th on January 28, 2011 at 11:01 AM | PERMALINK



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