The White House today downplayed news that the economy contracted 0.7 percent during the first quarter of the year, arguing “the most stable components of GDP” were growing quite nicely.
The new number was a downward revision of the previous estimate that GDP had increased by a mere 0.2 percent.
From White House Council of Economic Advisor Chairman Jason Furman:
Today’s downward revision to GDP growth was entirely accounted for by revisions to inventory investment and net exports, with other changes being small and neutral on balance. The first-quarter slowdown was the result of harsh winter weather, tepid foreign demand, and consumers saving the windfall from lower oil prices. The combination of personal consumption and fixed investment, the most stable components of GDP, has grown 3.4 percent over the past four quarters. This solid long-term economic trend complements the robust pace of job growth and unemployment reduction over the last year.
Well, all of this is technically true. Furman is too good an economist to start making stuff up, though at this point it must be tempting. But here’s the issue: A strong economy takes hits and keeps on growing, even if at a slow pace for a quarter. Good things make up for the bad. That’s not what’s happening here.
Whatever the excuse making, the economy CONTRACTED. Something’s wrong. Moreover, growth in the fourth quarter of 2014 was a dismal 2.2 percent, and growth in the current quarter – the second of 2015 – is expected to come in at about two percent as well.
We’re at six and a half years. Folks, this is the Obama economy. Annual growth rates averaging a little bit above two percent, which is pathetic by historic standards. And years after the recession ended.
Mr. Furman can go about plucking the strands of good news from his data charts all he wants. But the bottom line is clear.
Despite massive debt-financed government spending and near-zero interest rates, the economy is in crummy shape. And it’s not Bush’s fault.