By most measures, the third quarter — July through September — wasn’t pretty. The Eurozone crisis intensified; the debt-ceiling scandal rattled investors; and Republican intransigence generated a downgrade in U.S. debt. Talk of a “double-dip” recession was ubiquitous.
But as it turns out, the U.S. economy muddled through anyway. The Commerce Department released its report this morning showing that the nation’s gross domestic product rose at 2.5% annual rate in the third quarter. It’s the strongest economic growth in a year, and a marked improvement over the anemic growth we saw in the first two quarters (January through June).
Indeed, economic growth in the third quarter was nearly double the rate seen in the previous quarter.
That said, it’s important to note that 2.5% GDP growth is hardly great news. It’s a clear improvement relative to the first half of 2011, but as Neil Irwin put it, we’re still dealing with “the diminished economic expectations of the post-crisis age.” By no means is 2.5% “robust” growth. On the contrary, to help claw our way back to economic health through a strong recovery, we’d like to see a significantly higher number.
I mention this in part because, while faster economic growth is encouraging, policymakers and pundits would be making a tragic mistake if they saw today’s numbers as an excuse for inaction (“See, the economy is starting to grow, so there’s no need to pass a jobs bill.”) The fact remains that we’re slowly getting out of a ditch — budget cuts, taking money out of the economy, and ignoring the jobs crisis may very well push us backwards in a hurry.
Indeed, this morning’s report emphasizes that spending at the state and local level fell at a 1.3% annual rate, which helped hold the economy back. Congressional Republicans not only support this drag on the economy, they’re eager to make it worse on purpose.
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.