Economic growth too puny to mean jobs

The funny thing about numbers is they can say different things to different people.

No wonder CPAs are such lousy conversationalists.

A case in point …

The economy grew at a slightly faster pace in the third quarter as Americans spent more freely.

Cheers!

However, the growth remains too weak to reduce unemployment.

Jeers!

At this rate the economy won’t be fully healthy again until Bristol Palin is in the White House and married to Karl Rove. Ryan Howard may swing at a strike before this economic nightmare subsides.

Let’s trip over the numbers, shall we?

The Commerce Department said today that the economy expanded at a 2 percent annual rate in the July-September quarter, which is a tick up from the feeble 1.7% growth in the April-June quarter.

Consumers helped boost last quarter’s economic growth with a 2.6 percent increase in spending at an annual rate. That trumped the second quarter’s 2.2 percent growth rate and marked the biggest quarterly increase since a 4.1 percent gain at the end of 2006, before the recession.
The Commerce Department sent special congratulations to my wife and I for spending like drunken sailors during the third quarter on infrastructure upgrades to our own Palace of Versailles.
But my wife and I were not alone in emptying our wallets. A stock market rebound made people feel better about spending. Bargains, on everything from cars to home furnishings, also drew them out.
For those of you who slept through Economics 101, consumer spending accounts for roughly 70 percent of economic activity. If you connect the dots, consumer spending plays a major role in determining the vigor of the economic rebound.
Now it’s time for the fateful however disclaimer.

To have any impact on the 9.6 percent unemployment rate, consumers need to spend even more and the economy would need to rack up growth of 5 percent for a full year.
With so many folks either unemployed or without a raise for a couple years, good luck with that.
Which brings me to the final number of the day: Catch-22.

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