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US GDP For 2012 (1.74%) Trails 2011 (1.80%)

From a slightly shaken Associated Press:

US economic growth up to still-modest 2 pct. rate

By CHRISTOPHER S. RUGABER | Fri October 26, 2012

WASHINGTON (AP) – The U.S. economy grew at a slightly faster 2 percent annual rate from July through September, buoyed by more spending by consumers and the federal government.

The AP never mentions it, but most economists say that a GDP in excess of 2.5 percent is needed over several quarters to make any substantial headway in cutting the jobless rate.

For the record, today’s report also says that the GDP price index climbed to 2.8%, which is how the government measures inflation. And that does not include energy prices or food. So how is there any real growth?

Growth accelerated from the 1.3 percent rate in the April-June quarter, the Commerce Department said Friday.

The report is the last snapshot of economic growth before Americans choose a president in 11 days. The pickup in growth could lend weight to President Barack Obama’s message that the economy is improving.

And there is no chance whatsoever that these number has been massaged. Or that we will hear that it has been revised down drastically next month.

Still, growth remains too weak to rapidly boost hiring. And the 1.74 percent annual growth rate for the first nine months of 2012 trails last year’s 1.8 percent growth – a point that Republican nominee Mitt Romney has emphasized.

Yes, not only are we worse off than we were four years ago. We are worse off than we were last year. Just as Romney has claimed in the debates.

The economy grew faster last quarter in part because consumer spending rose at a 2 percent annual rate, up from a 1.5 percent rate in the second quarter…

And federal spending surged, mainly because of the sharpest increase in defense spending in more than three years…

What a coincidence. Obama is even willing to spend money on Defense if it will help him hold onto power.

But note how we are never told what portion of this ‘increase’ is due to government spending. Probably the private sector did not grow at all.

The economy was also slowed by the effects of the severe drought that struck last summer in the Midwest. The drought cut agriculture stockpiles and reduced the annual growth rate by nearly a half-point. Once crop supplies return to normal, they will help boost economic growth, analysts noted

Hilarious.

The government’s report covers gross domestic product… It was the government’s first of three estimates of growth for the July-September quarter…

And if the recent pattern holds, it and will be revised down in each of the two subsequent reports. Long after the election.

It is unclear what effect, if any, Friday’s report might have on the presidential race. Some analysts said they doubted it would sway many undecided voters in battleground states.

Mostly because the news media will downplay it. Or, worse, pretend it is good news.

The factors supporting the economy’s growth are shifting. Exports and business investment drove much of the growth after the Great Recession officially ended in June 2009. But those sectors are weakening…

Businesses have grown more cautious since spring, in part because customer demand has remained modest and exports have declined as the global economy has slowed…

And the upcoming fiscal cliff, including the largest tax increases in the history of the world have nothing to do with their caution.

Since the recovery began more than three years ago, the U.S. economy has grown at the slowest rate of any recovery in the post-World War II period. And economists think growth will remain sluggish at least through the first half of 2013.

This detail is buried in the second to last paragraph in this AP article.

By the way, lest we forget, we are supposed to believe that more than 873,000 jobs were added to the economy in September. Which was the biggest surge in jobs since 1983, when the GDP was growing at rate of a 9.3%. And now we are told the economy only grew at 2% from July through September.

It just doesn’t add up.

This article was posted by Steve Gilbert on Friday, October 26th, 2012. Comments are currently closed.

4 Responses to “US GDP For 2012 (1.74%) Trails 2011 (1.80%)”

  1. dasher

    Truly, this is all Romney should need for the next 11 days, provided people can read and understand english.

    Great work Steve, thanks!!

  2. lesliemcintire

    You quoted the AP, “And federal spending surged, mainly because of the sharpest increase in defense spending in more than three years…” I wonder how much of that increase in spending was for biodiesel fuel at roughly $24/gal as opposed to $4/gal for traditional diesel fuel.

  3. BannedbytheTaliban

    Damn those economic headwinds.

  4. mr_bill

    Remember when the nerobama regime was predicting upwards of 4% GDP growth for 2012?




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