Much as I’d love to wallow in election analysis the rest of the week, there is, as Ezra Klein reminds us, some economic news coming that may be impossible to ignore. What makes it complicated is that it’s actually “old news” about the performance of the U.S. economy, but if it’s bad or is misinterpreted, it could have significant present and future impact.
Coming up tomorrow is the third-quarter GDP report:
Economists expect the report to show that the economy grew at a 2 percent annual rate in the July to September quarter, down from the 2.5 percent growth rate in the second. If the number comes in about where analysts expect, it will be evident that the long slog toward a stronger economy remains just that: a slog. The economy has been growing at roughly 2 percent or a bit slower than that since the summer of 2009, and in many ways the sluggish GDP thought to have been recorded in the third quarter is a continuation of an old pattern rather than something new.
The worrisome thing is that this sluggish growth predates the government shutdown and debt ceiling shenanigans that undermined consumer confidence at the start of the third quarter. In other words, the worrisome thing is not just that growth was slow in the late summer months, but that there’s not much reason to think it will accelerate to finish the year.
Then on Friday comes the October Jobs Report, which will obviously reflect, not just anticipate, the shutdown and the associated economic damage.
October was a curious month, with the government shuttered for 16 days and markets on edge amid the risk of a debt default. The consensus forecast of economists surveyed by Bloomberg is that the report will show a mere 120,000 jobs were added, and the unemployment rate edging up to 7.3 percent from 7.2 percent. But analysts stress that it will be harder than usual to draw any firm conclusions about what is happening to the job market.
The report will be skewed by the likelihood that furloughed federal workers will be counted as jobless in terms of the unemployment rate, but employed in terms of the net new jobs measurement. Probably the best thing that could happen is if economists and the markets that rely on their advice decide to write it off as a screwed-up report that doesn’t tell us much. But when’s the last time people in that influential position publicly shrugged?