Towards the end of 2011, projections showed sluggish economic growth in the first quarter of 2012, and most analysts expected output to grow at around an annualized rate of 1.8 percent. However, when the economy appeared to pick up steam in the late winter, expectations shifted, and most believed we'd see GDP growth around 2.7 percent.
The newly released GDP numbers, then, are not at all welcome. They're better than we expected in December, but far short of what we expected this morning.
The U.S. economy slowed more than expected in the first quarter, the Commerce Department reported Friday. Real gross domestic product rose at a 2.2% annualized rate in the first quarter, down from a 3.0% increase in the fourth quarter. Economists had expected a stronger 2.7% growth rate. The big story for the first quarter was the slowdown in business spending and inventory investment. The government sector also dampened growth. This weakness was partially offset by stronger consumer spending and exports.
Growth at 2.2 percent is better than what we saw in most of 2011, but that's not saying much -- 2011 was a major disappointment. What's more, while 2.2 percent wouldn't be an awful number under normal circumstances, the point is the status quo isn't normal at all. Given the severity of the Great Recession, and how much ground there is to make up, we need to see a significantly higher number.
More jarring still is the realization that we can do little more than hope conditions improve on their own. The Federal Reserve appears completely unwilling to take additional steps, and Congress simply lacks the ability to pass effective economic legislation given the Republican agenda. Even if Americans wanted to see policymakers take action to grow the economy and create jobs, Americans' choices in the 2010 midterms mean there's very little that can be done.
With that, here's a chart showing GDP numbers by quarter since the Great Recession began. The red columns show the economy under the Bush administration; the blue columns show the economy under the Obama administration.