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July 29, 2011 9:00 AM Weak growth plagues U.S. economy

By Steve Benen

It’s almost funny, at least in a sardonic sort of way, to think back a few months ago. In early May, Macroeconomic Advisers, one of major firms providing economic modeling and forecasting, released its projection for economic growth in the second quarter, and things looked pretty good. The firm projected that the U.S. economy was on track to show 3.7% growth in the second quarter, which would be evidence of a pretty healthy recovery.

Soon after, the projections were lowered. Then lowered again. Then lowered some more. As Europe struggled with debt crises, Japan struggled with the aftermath of a natural (and unnatural) disaster, state and local governments continued to scale back, and congressional Republicans took a sledgehammer to the American political process, the prospects for the second quarter kept getting worse.

Today, those fears were confirmed.

The economy grew less than expected in the second quarter as consumer spending barely rose amid higher gasoline prices, and growth braked sharply in the prior quarter, a government report showed on Friday.

Growth in gross domestic product — a measure of all goods and services produced within U.S. borders - rose at a 1.3 percent annual rate, the Commerce Department said. First-quarter output was sharply revised down to a 0.4 percent pace from 1.9 percent.

Economists had expected the economy to expand at a 1.8 percent rate in the second quarter.

It’s worth emphasizing that economic growth data for the previous two quarters were also both revised downward — by quite a bit. We thought the first quarter (January through March) was weak, but the revised number, 0.4%, suggests the economy barely grew at all. By that measure, the second quarter’s 1.3% may even look like progress.

But make no mistake, this is anemic growth. Coming out of the deepest recession in generations, we need much stronger and more robust growth to help get us back to where we were.

And that’s precisely what makes the current debate in Washington so infuriating. Instead of looking at the GDP numbers and rising unemployment as evidence of an economy that needs a boost, policymakers are engaged in a deliberate effort to take money out of the economy and focused on a debt crisis that doesn’t exist.

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 is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

Comments

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  • SW on July 29, 2011 9:06 AM:

    This isn't an act of god. It is a function of public policy. And we are headed in the wrong direction.

  • dr. bloor on July 29, 2011 9:10 AM:

    @sw:

    Gee, what makes you think the deficit-cutting, anti-Keynesian just-like-dead-in-the-water-UK bills that Reid and Boehner are kicking around is "heading in the wrong direction?"

  • DAY on July 29, 2011 9:15 AM:

    We live in a consumer driven economy, and until folks get back behind the wheel- and have money to buy the gas- we will continue to be in the doldrums.

  • T2 on July 29, 2011 9:21 AM:

    Weak Growth??? I'll tell you what really plagues the US Economy......it's the Republican Party.

  • stevio on July 29, 2011 9:23 AM:

    Boehner/McConnell will kill Obama and the economy to rid themselves and their handlers of the black man running the joint. The middle class (oxymoron) has had its run in the sun and policies pushed by the "Party of the Rich" have become law. Amazing how so few can do so much damage to so many for such an ignoble cause.

    Nauseating on so very many levels.

  • Mr. Serf Man on July 29, 2011 9:27 AM:

    Like they said over at TPM

    Let's go ahead and suck some more demand out of the economy by cutting government spending. But first, it'd be a good idea to roil the credit markets by flirting with government default.

    Anything we're leaving out of this recipe for disaster

  • burro on July 29, 2011 9:35 AM:

    Can't you just hear repubco's sigh of relief as they see those numbers getting closer to shruby's again? Those initial towering bars of blue, making shruby's red bars of failure look so pathetic and unnecessary, were intolerable.

    If the assholes can't have tall bars, then nobody gets tall bars. The tantrum that ate America.

  • berttheclock on July 29, 2011 9:35 AM:

    To add to this mess is the move by Mica of Florida to cut off funding of FAA projects, especially, in states where the Air Traffic Controllers Union was supported by Democratic Senators. Mica wanted to destroy the union and, once, miffed by the Democratic backing, he cut the funding. Work stoppages on many projects have occurred taking even more money out of the economy.

  • walt on July 29, 2011 9:37 AM:

    We're disappointed but should we be surprised? I know the economists I read, like Dean Baker, Paul Krugman, Brad DeLong, and Robert Reich have been pessimistic about the economy because they see no way out of the liquidity trap. And our political crisis ensures we won't use stimulus to find a way.

    Even Larry Summers seems to understand that the focus on curbing deficits misses the point. Too bad our president disagrees.

  • Celui on July 29, 2011 9:50 AM:

    Excellent blog, Steve, and some really cogent comments. This entire issue concerning big bank profits, retention of investment capital, exorbitant CEO salaries and 'uncertainty' (I'm uncertain what that means today) reminds me of the propensity we have in our pop culture to watch trainwrecks, declare them to be 'horrific', and then go out of our way to find the next trainwreck so that we can declare it worse than the previous one. In keeping with this analogy, this entire mess reminds me of the fascination with 'Hoarders', wherein some poor schlub keeps on hoardind all sorts of nonsense within his four walls until the stench, space and sensibility become untenable. Then, in comes some 'wise' soul with the easy solution to simply clean out the mess and go forth. Very obvious; very uninteresting, except for the close-up grimacing faces. See if you can apply this to the current photo array of our elected officials. Nonsense, lies, deceptions, weapons of mass distraction. They all lead to failure at the expense of the taxpayer. Captcha says: 'hungering etivere'; I believe we're all 'hungering' for sanity, openness, and an end to uber-partisanship at the expense of all.

  • burro on July 29, 2011 10:03 AM:

    Actually, tantrum doesn't come close to doing justice to the evil.

    This is better... Dean Baker via DKos:

    http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/the-nonsense-battle-over-the-debt-ceiling

    "[T]he battle over the debt ceiling is an elaborate charade that is threatening the country’s most important social welfare programs. There is no real issue of the country’s creditworthiness of its ability to finance its debt and deficits any time in the foreseeable future. Rather, this is about the business community in general, and the finance sector in particular, taking advantage of a crisis that they themselves created to scale back the country’s social welfare system."

    Shock Doctrine on a silver platter, with the "shock" completely manufactured.

  • Trollop on July 29, 2011 10:26 AM:

    I blame this on the teatard atmosphere. Our pathetic American Idolotry Media gave these idiots a voice without one intelligent query to their intellectual validity. I say we take them all out, starting with the media (and Ginni Thomas of course).

  • Left Wing Conservative on July 29, 2011 11:23 AM:

    Oh, Steve. Remember in 2009 when every day your blog said Pass. The. Damn. Bill.? I wish you'd bring up every day Ted Strickland's recent excellent suggestion that Congressional Democrats need to be forcing regular votes on "jobs bills" to show the American people there is another way. Screw Obama and his focus on his re-election. The Congressional Democrats need to show the way here and Steve Benen could push the conversation just as he did with passing the ACA. Thank you.

  • Henry Massingale on July 31, 2011 5:25 PM:

    This is a lie, this economy is in trouble because of the following,
    This Debit Ceiling Cap, is now being watched, supervised if you wish, and the Bad Boys Of Office.....well..... I will say it again,
    Bad Boys, Bad Boys, Whats You Going To Do When They Come For You, Bad Boys.
    Now check this out of why the Government Officials wanted the Health Care Bill to go through, This $100 Trillion Dollar System per year, not profit....look what the Bad Boys did..
    $16 TRILLION IN SECRET BAILOUTS - By CBS News, this publicly.The first ever GAO (Government Accountability Office) audit of The FED was released Sunday, July 24 revealing $16 TRILLION IN SECRET BAILOUTS / News Reports
    Today's Headlines: Thursday, July 07, 2011
    Judiciary Committee Launches Probe of Kagan’s Involvement in Obamacare
    To place a Judge in favor of the Obamacare, Democrat Party...
    Yes Operation Clean Sweep / byMassngale
    Is in order, for the Bad Boys Of Congress
    Henry Massingale

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