3rd quarter GDP 2.8%, not 3.5%

posted at 12:55 pm on November 24, 2009 by Ed Morrissey

The Commerce Department revised its third-quarter economy estimation sharply downward today, from the previously announced 3.5% annualized growth to 2.8% instead.  That number would still be the best quarter in almost two years, but as the AP notes, it’s almost entirely comprised of short-term government stimulus:

The economy grew at a 2.8 percent pace last quarter, as the recovery got off to a slower start than first thought.

The Commerce Department’s new reading on gross domestic product wasn’t as energetic as the 3.5 percent growth rate for the July-September period estimated just a month ago.

The main factors behind the downgrade: consumers didn’t spend as much, commercial construction was weaker and the nation’s trade deficit was more of a drag on growth. Businesses also trimmed more of their stockpiles, another restraining factor.

The new reading on GDP, which measures the value of all goods and services produced in the United States — from machinery to manicures — was a tad weaker than the 2.9 percent growth rate economists surveyed by Thomson Reuters had expected.

Jim Geraghty points out one big set of numbers that changed:

The revised numbers out today indicate that automotive consumption was less than half initially estimated, contributing 0.81 of percentage point to growth. The overall quarterly growth number was revised from 3.5 percent to 2.8 percent.

The White House had pointed to the original number of 1.7% as an indicator of the success of Cash for Clunkers. Now it looks as though they overestimated that number as well, which auto analyst Edmunds.com had stated. For speaking a little truth to power, the Obama administration went to war with Edmunds, a war they lost in the first exchange and have completely lost today.

Meanwhile, the AP does its best to spin the news as much as it possibly can:

Even with the downward revisions, it was notable that such spending grew, after falling in the previous quarter.

But they do manage to ask the correct question, albeit halfway through their article:

What’s not clear is whether the recovery can continue after government supports are gone.

Answer: no, at least not in isolation. In order to get a true recovery, which depends on consumer confidence and spending, the US needs to get the job-creation engine going. That won’t happen while the Obama administration and the Democrats send signals of massive tax increases and energy cost hikes with their expansionist, statist agenda. Investors will stay on the sidelines and shelter their money for the monsoon season of rainy days they see when Obama has to start paying for all of his ambitious programs.

It’s not “notable” that a couple of short-term stimulus programs spiked consumption in two narrow — but politically visible — categories. In fact, a more cynical person would conclude that Obama wanted one good report on GDP in order to push his complete agenda through Congress without people questioning its cost. Unfortunately, the timing failed, and even the artificial spike wasn’t nearly as high as Obama and his team initially claimed. What will be “notable” is what happens when the artificial stimuli disappear and jobs don’t reappear.

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I thought this was funny.


Jerricho68 on November 24, 2009 at 11:39 PM

I guess Harvard quit teaching math when Obowma was a student…correction, if he ever was a student. Has Obowma ever been accurate regarding his economic plans?

Must be his “created” part of that whole “saved or created” thing.

dthorny on November 25, 2009 at 6:19 AM

It’s probably even lower than 2.8%. Just wait for the Obama administration to release even lower figures late on a Friday night/Saturday morning (say, 3:00 a.m.?)

olesparkie on November 25, 2009 at 7:29 AM

Rejoice in the BAD news, Party of No! Only when America fails, you you WIN!!

simplesimon on November 25, 2009 at 7:42 AM

simplesimon on November 25, 2009 at 7:42 AM

like when the democRATs wanted us to lose the war?

with Obama, failure is not an option, its the goal.

right4life on November 25, 2009 at 8:53 AM

Dirty filthy liar…. Does he know that he is the laughing stock of the world. What should we expect other than destruction. He is not truly an American at heart. He is not one of us and not of our culture and does NOT know what it is like to be and feel as an American. POS. So, he lies in the hopes to garner just a bit more time and a bit more press (AP is barely reporting this difference in numbers) in the hopes of lulling us back to sleep yet again. CIC indeed. Our troops have been languishing over there for months waiting for his childish meetings and garbage. Undercutting the generals by a couple thousand troops. What nonsense. He is a liar and propogandist and community organizer – AT BEST. At worst he lies, is deceitful, knows nothing as he has NO true experience and is dangerously narcissistic. I can’t believe this is the leader of my beloved country.

highninside on November 25, 2009 at 8:58 AM

Change in 2010 and 2012 is coming.

Obama Out, Palin In.

old trooper2 on November 26, 2009 at 11:01 AM