by Frank James
This goes into tell the tell-us-something-we-don't-know category. The Commerce Depart. reported this morning that the economy was really, really bad in the third quarter, contracting by three-tenths of a percent.
The number is an early estimate so there's the possibility it could be revised in either direction. But if it is accurate, it would suggest the possibility that we entered a recession earlier this year. A recession is officially considered two consecutive quarters of negative real Gross Domestic Product growth.
Coming just days before Election Day, the GDP report adds to the overall picture of economic gloom and anxiety which likely helps Democrats, including Sen. Barack Obama, than it does Republicans and their presidential nominee, Sen. John McCain who gets lower ratings from voters on his ability to manage the economy than Obama.
Here's a statement from the McCain campaign:
ARLINGTON, VA -- Today, Doug Holtz-Eakin, McCain-Palin 2008 Senior Policy Adviser, issued the following statement on the Gross Domestic Product (GDP) number:
"Today's announcement that third quarter GDP fell at a 0.3 percent rate confirms what Americans already knew: the economy is shrinking. Barack Obama would accelerate this dangerous course. According to the independent Center for Data Analysis, Barack Obama's new policies will destroy nearly 6 million jobs over the next decade.
"Barack Obama's ideologically-driven plans to redistribute income will impose higher taxes on families, small businesses, and investors; expensive, rigid, job-killing health mandates on employers; energy policies that fail to promote domestic oil, natural gas, and coal, and will impose a massive Washington-driven regulation of everything from home furnaces to factories; isolationist trade policies that endanger one out of every five jobs; and massive new spending plans that that will burden the economy and saddle our children with debt. Barack Obama is change Americans cannot afford.
"John McCain's comprehensive reforms will clean up Wall Street, clean up Washington, and create nearly 2 million more jobs over the same period. John McCain offers a new direction and a real choice: lower taxes and under control spending; lower health care costs and portable insurance; an energy policy that declares independence from dangerous and unstable sources, values the environment, and supports growth; serious reforms to taxes, education, and trade to promote global competitiveness, and short-run plans to help the seniors, savers, homeowners, and workers hurt by the financial crisis."
And here's Sen. Barack Obama's statement in response:
This morning, we learned that GDP has fallen for the first time this year, which means America is producing less and selling less and our economy is shrinking. American consumers were especially hard hit, experiencing their largest decline in spending in 28 years as wages failed to keep up with the rising cost of living. The decline in our GDP didn't happen by accident - it is a direct result of the Bush Administration's trickle down, Wall Street first, Main Street last policies that John McCain has embraced for the last eight years and plans to continue for the next four. These policies didn't work then, they won't work now, and I'm running for President to end them. We need to grow our economy by creating jobs, providing tax relief for middle class families, and helping people stay in their homes, and that is exactly what I will do as President.
Here's the Commerce Depart.'s release:
Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- decreased at an annual rate of 0.3 percent in the third quarter of 2008, (that is, from the second quarter to the third quarter), according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.8 percent.
The Bureau emphasized that the third-quarter "advance" estimates are based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The third-quarter "preliminary" estimates, based on more comprehensive data, will be released on November 25, 2008.
The decrease in real GDP in the third quarter primarily reflected negative contributions from
personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were largely offset by positive contributions from federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Most of the major components contributed to the downturn in real GDP growth in the third
quarter. The largest contributors were a sharp downturn in PCE for nondurable goods, a smaller
decrease in imports, a larger decrease in PCE for durable goods, and a deceleration in exports. Notable offsets were an upturn in inventory investment and an acceleration in federal government spending.
Final sales of computers contributed 0.06 percentage point to the third-quarter change in real GDP after contributing 0.17 percentage point to the second-quarter change. Motor vehicle output contributed 0.09 percentage point to the third-quarter change in real GDP after subtracting 1.01 percentage points from the second-quarter change.
Comments
That is what incompetence and malfeasance, by the Bush-McCain Republicans have done to our economy, and our lives !! Meanwhile, almost everyone of these elected officials, will not miss a meal, they will not be evicted from their home, because of foreclosure and they will not have to make that unamerican choice of food over medications. Is this the kind of America, our Founding Ancestors were dreaming of, when they thought up this nation !!?? I don't think so and the rest of America, doesn't think so !! Even the boys and girls that have been gaming this nation, for the past 50 years, know that America wasn't about the money. She has always been about her citizens and their well-being and to say otherwise, is to lie and distort the intent of the noble idea, known as America !! Unfortunately, there are those that think America was the land of the greed and home to the knave and look at the state we find ourselves in, today. It must be the 51st state, the dismal state, brought to us by the Bush-McCain Republicans. Let's shut down that dismal state, that the Bush-McCain Republicans were architects to and elect Senator Obama and Senator Biden and help them destroy that dismal stat and return to the 50 states we have !! That is, if Governor Palin and her pals don't succeed and secede Alaska from our Union !!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE AND WHOLE. NOW.
Posted by: Don Fitzgerald, Chicago | October 30, 2008 9:56 AM
For several years the market was “drunk” with profits made by mergers and the bottom lines of corporations, not taking into account the consumers that are the driver of the economy. Middle income wage earners have seen their wages drop significantly in their buying power, while CEO’s have seen their income sky rocket. Until we allow the consumers to recover their ability to purchase, we’ll only be digging the hole deeper.
Posted by: Rory M | October 30, 2008 11:30 AM
Great piece. Times are scary, no? The U.S. economy has surely taken quite a hit over the past few months. With recession and the need for reform on the minds of a majority of Americans, we thought you would be interested in two non-partisan guides we’ve put together here at Public Agenda on the economy (http://publicagenda.org/citizen/electionguides/economy) and taxes, spending and debt (http://publicagenda.org/citizen/electionguides/taxesdebt). Feel free to check these out and get back to me with any questions. Thanks again for an informative piece!
Posted by: William Hallowell | October 30, 2008 1:32 PM