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.