Remember last month when we learned the economy shrunk slightly in the last three months of 2012? Well, the good news is, those figures have now been revised, and as it turns out, the economy actually grew in the fourth quarter. The bad news is, the figures were revised up only slightly, and meets literally the bare minimum standards for economic growth.
The U.S. economy grew in the fourth quarter – but just barely – instead of contracting for the first time in three and a half years, the Commerce Department said Thursday. The U.S. expanded at a 0.1% annual rate in the last three months of 2012, better than the initially reported 0.1% drop but well below the third quarter’s 3.1% pace.
Why was economic growth so anemic in late 2012? Because of government spending cuts. Indeed, 0.1% growth would have been 1.5% growth were it not for lower government spending.
The political salience of this should be obvious – Republicans will respond to discouraging economic news by insisting that conditions will improve through fewer public investments and more public-sector layoffs, which is exactly what’s due to happen starting tomorrow thanks to sequestration.
But every shred of economic evidence tells us GOP policymakers have this backwards. The government is, in reality, hurting the economic recovery, not through too much investment, but through not enough. The sequester will make this worse, on purpose. Congressional Republicans are looking at anemic economic growth, see an austerity bomb set to detonate, and refuse to compromise with the popular Democratic majority.
For those hoping to see a more robust economic recovery, watching the nation’s elected lawmakers act against our economic interests is, to put it mildly, frustrating.