U.S. economic growth slightly stronger than expected

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.

gdp3Q2010r.jpg