Old and busted: The economy is picking up steam under Obama and that’s great news. New hotness: The economy is slow … and that’s great news! After this morning’s GDP report from the Department of Commerce, NPR offered the counterfactual headline you’d only see during a Democratic administration:
Wait, someone at NPR must have thought later. We can’t admit that the economy is slow at 2.2% GDP, even though everyone else already knows it. When readers click on the link, the argument magically changes to this:
Scott Neuman offers this defense of slow-growth policies:
Growth rates have been modest at best compared with the 4-plus percent growth in the years well before the U.S. began slouching toward its worst post-World War II recession.
On Friday, the government reported that the economy grew at a 2.2 percent pace in the first quarter, down from the 3 percent rate at the end of 2011. The Federal Reserve this week said it expects growth to “remain moderate over coming quarters and then to pick up gradually.”
Common sense says high growth rates are good and slower, more modest ones are not so good. But is that always the case? After all, the “irrational exuberance” of the early 2000s helped bring on the recession as people borrowed and spent their way to prosperity.
Actually, it wasn’t irrational exuberance of growth that Alan Greenspan criticized in that period; it was irrational exuberance in the stock markets that concerned him. That did cause people to use their homes like ATM machines, and fueled growth in that period unhealthily, but that was created by a deliberate distortion in lending markets, not by the economic growth itself.
Most of the economists Neuman quotes disagree with him, saying that slow growth combined with high unemployment is unhealthy — and wouldn’t become healthy until unemployment went below 6%, at least. In most years, that would just be common sense. In an election year with a Democratic incumbent in the White House, apparently the government-subsidized media feels more free to indulge counterfactual flights of fancy. I can’t imagine why …