Stinks in politics when reality intrudes. The nation’s gross domestic product in the April-through-June second quarter expanded a measly 1.3 percent, the Commerce Department reported today, down from an earlier estimate of 1.7 percent. The unemployment rate is stuck at 8.1 percent; business groups are decrying the looming “fiscal cliff” of expiring Bush tax cuts, automatic budget cuts and another debt-ceiling debate by year-end.
Here’s what a U.S. Business and Industry Council research fellow, Alan Tonelson, said about today’s GDP report in a news release:
This morning’s GDP figures cast grave doubt on both President Obama’s economic record and on the Federal Reserve’s latest, housing-oriented quantitative easing program. In addition to showing a deceleration of overall economic growth, they reveal an economy ridden with the same structural flaws that produced crisis and recession starting five years ago.
Specifically, a U.S. economy that became dangerously housing- and consumption-heavy remains nearly as dangerously housing- and consumption-heavy. And an economy that depended excessively for consumption and housing for growth still depends heavily on consumption and housing for growth. As a result, today’s recovery looks more like bubble reflation than like a return to economic health.
Let’s hope not. Still, consider: What’re the few bright spots you’re hearing about these days? The Fed vows to buy $40 billion a month in mortgage-backed securities in an attempt to keep priming the economic pump; mortgage rates hover near all-time record lows; consumer confidence is moving higher, tracking the rising Dow Jones and S&P averages; sales of existing homes are trending steadily upward and so are prices, even in battered markets like Metro Detroit.
Sometimes good news may not be what it seems, and five weeks or so from the most consequential presidential election since 1980, the accumulated economic numbers look less like good news for Team Obama and more like a warning to the rest of us.