The Commerce Department this morning gave a reading on the third-quarter 2012 Gross Domestic Product—the sum of goods and services produced in the United States. GDP climbed 2 percent (on an annualized basis) in July, August, and September, slightly above the predictions of economists. This was an improvement on the dismal 1.3 percent growth the economy saw in the second quarter, but still a long way from the sort of robust recovery that is needed to significantly bring down the unemployment rate and restore a sense of prosperity to the country.
Much of the growth was in consumer spending, especially for durable goods (such as automobiles, refrigerators, etc.), which saw growth at 8.5 percent. But business investment remained weak, with fixed investments (buildings and equipment, for instance) actually declining 1.3 percent after climbing 3.6 percent in the second quarter. This might reflect caution ahead of the election and fear that the “fiscal cliff” of tax hikes and government spending cuts due January 1 might actually come to pass. Most economists think that that would send the economy right back into full-blown recession.
Exports shrank, reflecting the deepening economic problems in Europe. Imports also fell, but at a lower rate. Federal government spending also accelerated in the quarter.
This isn’t a game-changer in the election by any manner of means. Everyone knows the economic recovery, which began in June 2009, four months into Obama’s term, has been anemic at best, so this report is just a continuation of the status quo. The jobs report due out next Friday might be more significant as it could show a rise in unemployment, correcting the anomalous October jobs report that showed an unexpected .3 percent drop in unemployment. If unemployment were to rise above 8 percent again, just four days before the election, that would be very bad news for President Obama.