U.S. economy accelerates to 2-percent growth in third quarter
By DAVID ROEDER Business Reporter October 26, 2012 8:09AM
First lady Michelle Obama speaks to supporters at Orr Middle School on Friday in Las Vegas. | JOHN GURZINSKI~AFP/Getty Images
Updated: November 28, 2012 6:07AM
The nation’s economy grew at a 2 percent annual rate during the third quarter, a number immediately dissected for its effect on the Nov. 6 presidential election.
Outwardly, the result appears positive for President Barack Obama. The report on the nation’s gross domestic product issued Friday by the Commerce Department showed growth increased from its pace earlier in the year.
A deeper look showed that the report delivered a mixed message, with fodder for either Obama or Republican challenger Mitt Romney. White House officials said it points to gradual improvement and shows consumers need the tax cuts Obama has advocated for the middle class and small businesses.
Romney immediately pointed out that the nation’s year-to-date economic growth, at 1.74 percent, has declined each year of the Obama presidency.
Economists said the report could confer little political advantage. The 2 percent rate topped growth projections that were meager, and the economy still is not rallying fast enough to reduce the unemployment rate.
One factor in the GDP report was a double-digit increase in federal outlays for defense. Diane Swonk, chief economist for Mesirow Financial Holdings Inc., called the federal increase “unexpected and unsustainable” and drew concern from other aspects of the report.
Drags on growth included business investment, which Swonk called a “particular blow” because it reflects doubt about the world economy and U.S. fiscal policies.
Robert Johnson, director of economic analysis at Morningstar Inc., took a more positive view. He focused on the report’s findings of higher consumer spending.
“I like it when consumers are spending because businesses eventually have to spend to catch up and replenish inventories,” he said.
“It’s moving in the right direction, but it’s still an unimpressive number,” said Larry Sabato, director of the University of Virginia’s Center for Politics. “It’s so close to the election that I don’t know how many people are left to influence.”
GDP measures the nation’s total output of goods and services. The Friday report was the last broad-based look at the economy before the election.
It could be quickly forgotten once the next unemployment report for October is issued. That happens Nov. 2, just four days before the election.
In September, the jobless rate dropped to a three-year low of 7.8 percent.