In January, Barack Obama and Democrats insisted that the 5.7% annual growth rate in the fourth quarter of 2009 showed that their stimulus plan had set the American economy back on track for rapid growth and job creation. The administration needed a big number for 2010 to allay fears that unemployment would stagnate at the current high levels for the long term. Unfortunately, they didn’t get it, with the 3.2% annualized GDP rate for the first quarter of 2010 falling below analyst expectations:
The U.S. economy grew at a 3.2 percent annual rate in the first three months of the year, evidence that the economic recovery continues to plug along but that growth is not accelerating in a way that would bring down joblessness rapidly.
The first-quarter gain in gross domestic product represents a deceleration from the 5.6 percent pace of growth in the final months of 2009, and is a bit below the 3.5 percent growth analysts were forecasting.
Neil Irwin at the Post manages to avoid using the word “unexpectedly” as part of his report. Maybe the Associated Press will employ its favorite adverb?
I see it as good news with the 3.2% growth, History tells us we need a much more robust economy to get things going:
The good news, however, doesn’t outweigh the bad. The last time the US suffered this kind of recession and unemployment, in 1982, it took several quarters of annualized growth of between 7%-9% in order to generate sufficient numbers of jobs to seriously lower unemployment. The long-term trend of the American economy is growth between 2.5-3%, which makes the 2010Q1 result barely a blip above average. It indicates that the current job situation may well become the “new normal,” with high unemployment remaining in place for years to come.
We are a long way from the end of this thing.
