Economy grows 2%: Consumer, government spending up

(MoneyWatch) There's no getting around a simple fact: The U.S. is mired in a slow growth recovery. The Commerce Department said third quarter GDP increased by 2 percent, boosted by a rise in consumer and government spending.

Consumer spending, which accounts for about 70 percent of U.S. economic activity, grew at a 2 percent rate. And after eight straight quarters of declines, government spending finally contributed to economic growth. Federal government spending jumped 9.6 percent, versus a 0.2 percent drop in the second quarter. State and local government spending was down slightly.

The result was on the higher side of analysts' expectations, but that's cold comfort for anyone who is hoping for trend-line historic growth any time soon. Through the first three quarters of the year, the economy has expanded by 1.75 percent, matching 2011's growth, though well below the average annualized GDP since World War II of 3 to 3.5 percent.

After living through a deep and painful recession, we should probably appreciate the plus sign in front of the GDP. (Who can forget the 8.9 percent contraction in the fourth quarter of 2008?) But it's hard to see how the economy is going to put more than 12 million unemployed Americans back to work with just 2 percent growth. Regardless of who ends up in the White House, lackluster growth may be with us for the next few years.

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Economists Carmen M. Reinhart and Kenneth S. Rogoff, authors of "This Time Is Different: Eight Centuries of Financial Folly," recently reiterated "that recessions associated with systemic banking crises tend to be deep and protracted and that this pattern is evident across both history and countries... Today, there can be little doubt that the U.S. has experienced a systemic crisis -- in fact, its first since the Great Depression. Before that, notable systemic post-Civil War financial crises occurred in 1873, 1893 and 1907."

Because the U.S. has experienced the "bad" kind of recession, it was never in the cards to see a classic "V-shaped recovery," where the economy returns to its old self within a year or two. So how much longer will it take? It will likely take 7 - 10 years to return to the pre-crisis peak in Q4 2007. The U.S. economy is five years into the mission, with another 2 - 5 years to go. That's a tough message, but a realistic one.

Editor's note: CBS MoneyWatch initially published an Associated Press story on the GDP report, which we have since replaced with this staff-written article. You can find the initial AP report and reader comments here.

[BigMykul]

How much of this "growth" is due to back-to-school purchases???

[cbunite]

Elect more Democrats.

GDP improved big time during the first part of the Obama admnistration -8.9% to 4% a 12.9% improvement. That's real big change. We went from losing 800,000 jobs a month to gaining 200,000 jobs a month. A 1 million job a month improvement!!
That's real big change. Then Congressional Republicans slowed down the economy. They blocked the Presidents proposals to increase job growth. They make $175,000 taxpayer dollars a year. Yet they felt no shame in blocking the Veterans Jobs Corp Act of 2012, just before leaving for vacation.

http://www.tradingeconomics.com/united-states/gdp-growth

[mjvwsr]

I know it's hard for you understand but no everybody can work for the government.

[cbunite]

Elect more Democrats.

GDP improved big time during the first part of the Obama admnistration -8.9% to 4% a 12.9% improvement. That's real big change. We went from losing 800,000 jobs a month to gaining 200,000 jobs a month. A 1 million job a month improvement!!
That's real big change. Then Congressional Republicans slowed down the economy. They blocked the President proposals to increase job growth. They make $175,000 taxpayer dollars a year. Yet they felt no shame in blocking the Veterans Jobs Corp Act of 2012, just before leaving for vacation.

http://www.tradingeconomics.com/united-states/gdp-growth

[cbunite]

Elect more Democrats.

GDP improved big time during the first part of the Obama admnistration -8.9% to 4% a 12.9% improvement. That's real big change. We went from losing 800,000 jobs a month to gaining 200,000 jobs a month. A 1 million job a month improvement!!
That's real big change. Then Congressional Republicans slowed down the economy. They blocked the President proposals to increase job growth. They make $175,000 taxpayer dollars a year. Yet they felt no shame in blocking the Veterans Jobs Corp Act of 2012, just before leaving for vacation.

http://www.tradingeconomics.com/united-states/gdp-growth

[bill_here]

Gosh, how unfortunate that you 'forgot' to mention that the same Commerce dept. reported yesterday that Durable Goods orders were up 9.9% in Sept. - the largest increase in nearly three years. In case you weren't aware of it, Durable Goods orders are considered an important indicator of economic activity in coming months.

http://articles.marketwatch.com/2012-10-25/economy/34718612_1_durables-report-orders-for-long-lasting-goods-orders-for-durable-goods

[hypnotoad72]

As we offshore more jobs, the government cannot pay its bills.

Never mind dislocated workers not finding new work, or taking new work that pays far far less... and skill rot and everything else that comes about due to this situation...

Meanwhile, we still give corporate welfare to big companies - even in return for offshoring jobs. That doesn't seem quite right...

Now, Romney can ignore every detail of our economy, except to pick and choose which corporate welfare he'll halt (despite keeping it going for his buddies), and end all welfare and other safety nets for the working class, but he's said nothing believable about bringing back jobs. Especially as he helped profit for himself by offshoring in the first place.

"Believe in America"? Romney might say it, but he believes in China and the Cayman Islands far more... So do his buddies:

http://www.zdnet.com/blog/government/irony-gop-call-blasting-obama-for-unemployment-hosted-in-philippines/11257

The GOP is an anti-American, pro-communist joke. You don't work to benefit communist countries while telling Americans you're pro-America, as here is another example:

http://www.ontheissues.org/SenateVote/Party_2005-63.htm

[DCropp]

Dig into the data on the natural gas expansion fueling stations in 2013 and you will realize that there is a great deal of savings for US companies, particularly trucking companies coming next year.
American vehicle companies are seeing orders increase for CNG vehicles and this trend will increase rapidly as they realize the savings.

The US is seeing a brand new industry being built. A US natural gas to diesel conversion plant is being built here. It can convert natural gas to diesel for far less than oil to diesel today.

Additionally, we are seeing the LNG export industry just starting.

US oil production will soon overtake Saudi Arabia as the #1 oil producer in the world.

An interesting note. The delay to the Canadian oil pipeline is helping buy all the US oil and natural gas companies extra time to ramp up production and develop these new US technologies and US exports.

All of this assumes no changes from the current path we are on.

[sandy 1027]

The problems that we face are mainly systemic, and there has to be more spending to make significant progress on the economy-not just the deep cuts that Romney and Ryan are proposing; and Republicans in Congress have pushed.We have had a lot of budget cuts in states, and even cuts in government jobs that have depressed the economies of states and the nation.Austerity will set the economy back even more.We need to heed the lessons from the European financial crisis, or we will be them.For most of the countries in trouble, their problems,overall, are due to this unbalanced approach of all cuts with no revenue and a lack of spending.

[sandy 1027]

The problems that we face are mainly systemic, and there has to be more spending to make significant progress on the economy-not just the deep cuts that Romney and Ryan are proposing; and Republicans in Congress have pushed.We have had a lot of budget cuts in states, and even cuts in government jobs that have depressed the economies of states and the nation.Austerity will set the economy back even more.We need to heed the lessons from the European financial crisis, or we will be them.For most of the countries in trouble, their problems,overall, are due to this unbalanced approach of all cuts with no revenue and a lack of spending.

[MunkeyDuck]

Obama spends 1m to create 1 - 10k part time job. O is too stupid to be president.

Barack Obama is at it again -- spending your tax dollars to bail out his failed economic plan. It's more of the
same from an out-of-touch president with no plan to fix our economy and put Americans back to work.

This past week, the Federal Reserve announced it would print $40 billion every month to prop up this
administration's jobless recovery -- that's money we can't afford for jobs we will never see.

What did President Obama's plan deliver? 43 months of record unemployment; 23 million Americans
unemployed, underemployed, or no longer looking for work; $16 trillion debt; four trillion-dollar deficits;
and household incomes that have fallen more than $4,000.

The Romney-Ryan plan is different -- it will deliver 12 million jobs and grow the economy by 4 percent per
year. Their plan is based on the fundamental principle that more government is the problem -- not the
solution.

Everyone knows there was an economic crisis when President Obama was elected. But make no mistake --
four more years of these disastrous economic policies will lead America down an even deeper jobless hole.

It's time for real change, so Americans can get back to work

Vote for Romney