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Third-Quarter GDP Numbers are In: How did we do?

Oct. 26, 2012 9:22am Becket Adams

The U.S. economy expanded at a 2 percent annual rate from July through September, buoyed by a slight uptick in consumer spending and a 9.6 percent spike in government spending, according to the first of this quarter’s three GDP reports.

Yes, the economy grew by only 2 percent, higher than the 1.8 percent rate originally predicted, and government consumption can be thanked for that.

“This was the biggest rise in government spending in 3 years, and only the first contribution by Uncle Sam to its own GDP print since Q2 2010,” Zero Hedge reports. “So in much the same way as the September jobs print soared courtesy of government employee hiring, this same government is now juicing its own numbers to make itself look better.”

Growth increased from its 1.3 percent rate in the April-June quarter, the Commerce Department said Friday.

“The pickup in growth may help President Barack Obama’s message that the economy is improving. Still, growth remains too weak to rapidly boost hiring. And the 1.74 percent rate for 2012 so far trails last year’s 1.8 percent growth,” the Associated Press notes.

The slight improvement in economic growth can be attributed to a mild 2 percent uptick in consumer spending in the July-September quarter, up from 1.5 percent in the second quarter. However, even this number is pretty lousy when you take into account the fact that consumer spending, which drives about 70 percent of economic growth, missed expectations of 2.1 percent increase:

U.S. Economy Grew 2.0 Percent in Third Quarter

Courtesy: ZH

Businesses have grown more cautious since spring, in part because customer demand has remained modest and exports have declined as the global economy has slowed.

Many companies worry that their overseas sales could dampen further if recession spreads throughout Europe and growth slows further in China, India, and other developing countries. Businesses also fear the tax increases and government spending cuts that will kick in next year if Congress doesn’t reach a budget deal.

But, as mentioned in the above, this is just the first of three third-quarter GDP reports. The second and final reports won’t be released until after the election.

“The real question is what the second and third Q3 GDP revisions will show,” the Hedge notes. “Recall that Q2 GDP initially came out at 1.5%, then was revised to 1.7%, until finally coming to rest at 1.25%.”

Final Thought: Oddly enough, certain members of the media are trying to spin these pretty poor, albeit slightly better, numbers in a positive light.

But as the American Enterprise Institute’s James Pethokoukis reminds us: “In its 2011 forecast, the WH predicted 3.1% growth in 2011, 4.0% in 2012 and 4.5% in 2013, 4.2% in 2014.”

How’s that for perspective?

UPDATE — Republican presidential candidate Mitt Romney responds to this morning GDP report [h/t Human Events]:

Today, we received the latest round of discouraging economic news: Last quarter, our economy grew at only two percent, less than half the 4.3% rate the White House projected after passing the stimulus bill. Slow economic growth means slow job growth and declining take-home pay.

This is what four years of President Obama’s policies have produced. Americans are ready for change – for growth, for jobs, for higher take-home pay. Paul Ryan and I will deliver it.

UPDATE II — Following the release of today’s GDP numbers, the White House’s Alan B. Krueger issues the following statement [emphases added]:

Today’s report shows that the economy posted its thirteenth straight quarter of positive growth … Over the last thirteen quarters, the economy has expanded by 7.2 percent overall, and the private components of GDP have grown by 10.1 percent. While we have more work to do, together with other economic indicators, this report provides further evidence that the economy is moving in the right direction.

[...]

To strengthen economic growth and increase job creation, President Obama has proposed to Congress a plan that would help State and local governments retain and hire teachers and first responders, would assist the construction sector and economy of tomorrow by rebuilding and modernizing our Nation’s infrastructure, and would give small businesses tax cuts to encourage them to increase payroll. President Obama also proposed extending tax cuts to protect middle class families and virtually every small business owner from getting a tax increase at the beginning of next year. Extending these tax cuts would provide more certainty for the economy for 98 percent of American families and 97 percent of small business owners.

Follow Becket Adams (@BecketAdams) on Twitter

The Associated Press contributed to this report. Front page photo courtesy the AP. This story has been updated.

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Comments (44)

DOra Glasberg
Posted on October 26, 2012 at 12:24pm
Let me guess, even without reading the article,
Mittens says it should be better.
THe economy has been improving for a year now.
Poor babies. I know it’s a conspirisy!

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- DZ-015
  Posted on October 26, 2012 at 12:45pm
  Let me guess, you trolls are a Conspiracy of Dunces.
  
  Report this comment
- capitalismrocks
  Posted on October 26, 2012 at 1:16pm
  Mittens? How pathetic you are…
  
  Well, saying at this glowing report is less than 50% of what it is supposed to be based on the wasted stimulus (or herein – lack of stimulus) package… of course the numbers are a complete disappointment…
  
  If we were following Reaganomics instead of keynesianomics, GDP would already be well above what it needed to be, jobs are coming back strong, regulations and taxes have been reduced… BUT… revenue into gov’t coffers is increasing… why? Because when you reduce taxes and regulations, companies spend more, and make more and thus, generate more taxes, more people go to work… more payrolls taxes, people buy goods, sales taxes… that is how economics work… instead of tossing money to the wind, which gives a tiny bump, creates no lasting dynamic and then things go back into a slump again… that is what we have under Obamanomics… giving money out doesn’t create and grow an economy, unleashing Free Enterprise does!
  
  Report this comment
- h20sue
  Posted on October 26, 2012 at 1:48pm
  Mittens, my “A$$!” I’m a small business owner, struggling every day to keep my doors open for business and you have the audacity to call Mitt Romney, Mittens! Listen young lady or whomever you think you are, different areas of the country are in worse shape then others. I’ve lost my home due to corporations (customers not paying their bills on time, and no new sales due to the economy). I live in a home that is 60 years of age in dyer need of windows, AND insulation for winter. We are struggling to put food on the table. Jobs are scarce around our area, and gas much too high. We have no health care insurance because we can’t afford it. Don’t sit on your high horse and slam Mitt Romney because you, my dear idiot, must not have sense enough to poor pi$$ our of a boot! Get a life, and see what’s going on around you. Get out and listen to those of us who struggle to feed our children, or live on the streets, too proud to be characterized as “slum, or poor” . We work to survive and we don’t have WIC or SNAP, or Medicaid. I think you should think, look, and listen before you jump on a computer and run your mouth about something you know nothing about! As a proud republican I help my neighbors and I ask nothing from my government as there are way to many people scamming it when they could be cutting back, just as we’ve done! I see it every day. Don’t sit on your high horse and tell me otherwise, because you are WRONG! Frankly dear you need to move to MARS.
  
  Report this comment
- DOra Glasberg
  Posted on October 26, 2012 at 3:47pm
  I deal in facts not dogma.
  
  Report this comment
- jwpowers41
  Posted on October 26, 2012 at 4:06pm
  Tell that to the 23 million looking for work you idiot!!!!!
  
  Report this comment
- F.O.S. DIAPERHEAD
  Posted on October 26, 2012 at 11:10pm
  Obama has a 2 part plan for the economy.1. Steal from the rich and give to the poor and 2. print more money. The problem with this plan is that the only way we’re going to get out of this hole we’re in is to be more PRODUCTIVE and neither part of his plan does that. That can only be done by encouraging creativity and business growth. Obama has done nothing since he took office but pursue his ideological agenda of turning the land of the free and home of the brave into a cradle to grave nanny state. A state controlled by an overbearing centralized government that cannot coexist with the freedom that spawns the creativity that makes this country great and prosperous.
  
  continued…
  
  Report this comment
- Zekron
  Posted on October 26, 2012 at 11:31pm
  Dora Gassbag, a pile of dog poo could have done better than Odumbo. Only liberals think they are smarter than business men on the economy, as usual, they are not only wrong but disasters.
  
  Report this comment
lineinthesand
Posted on October 26, 2012 at 10:50am
Does anyone recall that when, I believe it was Q2, was ‘implemented’ that a large portion of the spending was not due to kick in until just before this election?

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republitarian
Posted on October 26, 2012 at 10:33am
We need to be growing at 5% per year.

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hoff
Posted on October 26, 2012 at 10:13am
I am so blessed to live in the times of the greatest recovery to mankind! The only person i can thank is my true messiah Obama! off to go drink some kool-laid and say my moring prayers to my Lord and Savior Barrack Obama bless him for all that he has done!

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- barber2
  Posted on October 26, 2012 at 10:19am
  HOFF : And , like a dedicated Chicago Democrat, be sure to vote for Obama EARLY and OFTEN !
  
  Report this comment
- drbage
  Posted on October 26, 2012 at 10:28am
  If this is the greatest, I hope I am never around when we have the worst.
  
  Report this comment
- hoff
  Posted on October 26, 2012 at 10:35am
  i truly hope you realize im being sarcastic. but seriously this is what all of my liberal friends think like he is the true messiah and the best president of all time yet they cant ever tell me any of the miracles he has performed for this country.
  
  Report this comment
- hoff
  Posted on October 26, 2012 at 10:36am
  barber2
  
  dont worry i voted in all 57 states and a few extra!
  
  Report this comment
- DOra Glasberg
  Posted on October 26, 2012 at 12:27pm
  Up is better than down,
  Get over it.
  Most of MY lib friends have been quite disappointed with Obama.
  And the first debate was an insult to his supporters..
  
  But no one in their right mind will vote for Romney and Ryan is a sick PR joke.
  
  Report this comment
ldaopines
Posted on October 26, 2012 at 10:12am
Romney will need to cut all government by 20%, streamline, consolidate, shake out dead wood, and allow states to decide on programs. Private companies reduce and restructure all the time. Secondly, he needs to realign all government pay and benefits so that they are comparable to the private sector. Government workers make 34% more now and have huge pensions and perks. Time to turn off the spigot.

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- skiziks20453
  Posted on October 26, 2012 at 10:33am
  spot on lpa…. spot on..
  
  Report this comment
- An_American_Thinker
  Posted on October 26, 2012 at 11:02am
  We know there are difficult times ahead, that 16T indebtedness will necessarily have to be dealt with. I would far rather have it be as controlled as possible with knowledgable people at the helm. Both Romney and Ryan understand economics, whereas President Obama, by his own admission on Leno the other night, can’t even do math.
  
  Report this comment
- DOra Glasberg
  Posted on October 26, 2012 at 3:50pm
  The military does not need, want or request another TWO TRILLION DOLLARS.
  Why not go there first.
  
  Are you Liz Cheney hoping to increase her Halliburton millions?
  
  Report this comment
contkmi
Posted on October 26, 2012 at 10:07am
Are we even keeping up with inflation? Seems to me inflation would cause most of this…

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- Cavallo
  Posted on October 26, 2012 at 10:36am
  You aint seen noth’n yet as far as inflation. That super tsunami of debt and borrowing is going to swamp us.
  
  Report this comment
rosegrower
Posted on October 26, 2012 at 10:06am
What is even more interesting is that the stock market has been tanking all week based on poor earnings news across the board. I realize that Wall Street tends to be reactionary, but when not one company in the spotlight reaches earnings expectations, that doesn’t indicate of a recovery. Pay no attention to the man behind the curtain, folks….

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barber2
Posted on October 26, 2012 at 9:55am
Like we believe any math or figures from the phony ” We Are the 99% ” Administration who also tried to sell us that video Big Lie for two weeks over Benghazi. Lies and hidden school records from the ” re-distribution” ( wink, wink ) Democrats. NOBAMA 2012 NO DEMOCRATS 2012

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- SavvyCowboy
  Posted on October 26, 2012 at 10:01am
  @BARBER2 – Right on!! Right on!! Nobama – 2012 and absolutely no commie-crats 2012. Time to RENEGE!!! :)
  
  Report this comment
- mikem1969
  Posted on October 26, 2012 at 10:08am
  you said it barber, it’s all to funny how only good economic info is coming out right before the election. just like gas prices are coming down right before the election. People need to wake up and see the calm before the storm. If any of them thinks energy prices, food prices, and prices for any consumer goods and services was high before the election, if hitler wins his second term, prices will skyrocket accross the board and finish this economy off causing riots so they can institute martial law. Be prepared, lock and load.
  
  Report this comment
crusaderx9
Posted on October 26, 2012 at 9:52am
Most everyone around me now openly mock these manufactured “good news” election season stories that are easily proved to be manipulated by desperate democrats… Truly shameless.

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Garman1
Posted on October 26, 2012 at 9:38am
If you subract the .71% govt. expenditure–i.e. QE3, then the figure is 1.29% which is a drop from the previous Qtr.

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freenj
Posted on October 26, 2012 at 9:37am
And four Americans dead in a terrorist attack in Benghazi 9/11/12, as everyone in the situation room watch live feed of attack and do absolutely nothing but lie!
15 U.S Army personnel murdered at Ft. Hood by terrorist yelling Ala Akabar, but it’s called work place violence. More lies by this administration.
Fast and Furious nothing resolved, Agent Terry dead and 100′s of Mexican Citizens murdered.
And this administration reasons that they should be re-elected, bu******. They should be prosecuted for high crimes and many misdemeanors!

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progressiveslayer
Posted on October 26, 2012 at 9:35am
Yes 2% growth is grand huh Barry? Go tell it to the Obamazombies and they’ll lap it up just like the Jerry Springer crowd that they are,you’ve got the simpleton demographic locked up. So you Obamazombies be sure to get out and vote on November 7th.

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- BODYBAG
  Posted on October 26, 2012 at 9:54am
  “So in much the same way as the September jobs print soared courtesy of government employee hiring, this same government is now juicing its own numbers to make itself look better.”
  
  Epic F’ing FAIL. I keep waiting for the point when people are finally FED UP with being LIED to.
  Thats all these monkeys have ever done from DAY ONE —- LIE. Not regular politician lying that
  most people expect, this is the DANGEROUS kind of lying of criminals.
  
  Report this comment
chkiaar
Posted on October 26, 2012 at 9:31am
little over a week before the big one…as etchasketch stated, gas prices down, GDP up, unemployment down…hmmmmmmm how convenient.
I can hear it now, Look what I did, Look what I did!!

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- yougottabekidding
  Posted on October 26, 2012 at 9:44am
  But what was the gov spending for?
  I’m pretty sure it was for something just to jazz the numbers. Oops was jazz determined by Chrissy to be a racial word?
  
  Report this comment
Snowleopard {gallery of cat folks}
Posted on October 26, 2012 at 9:31am
More proof of Obama economical debatical theories – government is the major spender now.

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ricckky
Posted on October 26, 2012 at 9:29am
All phony crap—no-one can believe anything out of Washington these days—-Lies and more Lies!!!

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RIGS
Posted on October 26, 2012 at 9:29am
I realy hope these figures are true!!!!!!! BUT can you trust anything this obama goverment put out especially this close to the election………………………………………

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EtchASketch
Posted on October 26, 2012 at 9:27am
GDP up, stock market up, gas prices down, Tea Brain IQ continues to nose dive.

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- gyro
  Posted on October 26, 2012 at 9:32am
  stupid post
  
  Report this comment
- DZ-015
  Posted on October 26, 2012 at 12:55pm
  Itch or Scratch, most folks IQ would have to dive the Marianas Trench to reach yours.
  
  Report this comment
Cavallo
Posted on October 26, 2012 at 9:27am
Normally Fascism provides short term economic gains.. The Obamessiah can’t even get that right.

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- Gonzo
  Posted on October 26, 2012 at 9:54am
  The fascists required everyone to work. He missed that part.
  
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- barber2
  Posted on October 26, 2012 at 10:17am
  GONZO: Work? Work ? Work is a four letter word to Obama. Unfathomable concept. Something those mean, evil capitalist do. Ugh. Nasty. That’s why those mean evil capitalists need to be the victims of that ” re-distribution” thing ! Punishment for actually working….
  
  Report this comment
Gonzo
Posted on October 26, 2012 at 9:26am
“the 1.74 percent rate for 2012 so far trails last year’s 1.8 percent growth” Spin Barry spin, I know you’ll be telling the gullible how great this is.

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- Cavallo
  Posted on October 26, 2012 at 9:36am
  Don’t cry for me, Argentina.
  
  Report this comment

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