President Joe Biden got some welcome economic news this week.
Good economic news has been hard to find lately, what with inflation surging and continuing discussion of a looming recession.
But the U.S. got some good news this week when the U.S. Commerce Department reported that the gross domestic product — the total value of goods produced and services provided in a specific period — grew by 2.6 percent in the third quarter of 2022.
That hardly reflects a booming economy. But it’s far better than the negative growth that occurred during the year’s first six months.
Consecutive negative growth quarters are the traditional definition of a recession. But some experts disputed that the U.S. economy had fallen into recession, and now they have some evidence to support that claim.
Commerce officials said the balance of trade with other nations boosted growth.
At the same time, however, economists reported that the traditional driver of the U.S. economy — consumer spending — cooled. While consumers continue to spend on services, they’re cutting back spending on goods while businesses are spending less on building.
Speculation by experts about the future of the economy comes cheap. But those who think they know suggest that the spending slowdown foreshadows — here comes that word again — a recession.
Why? While the unemployment rate remains low and thousands of jobs are, for reasons that are unclear — going begging, the Federal Reserve’s policy of raising interests to choke off price inflation is making more interested in saving their money for a rainy day rather than spending it now.
The chief economist for Regions Financial Corporation told The Wall Street Journal that the “overall state of the economy is deteriorating” thanks to the “weight of elevated inflation and higher interest rates.”
Those conditions, unfortunately, will remain in place for the foreseeable future, prompting Regions economist Richard Moody to say “that’s why we have pretty low expectations for the next several quarters.”
One important area of the economy that already is showing danger signs is housing. National sales are down, and interest rates are up — a killer combination.
What Americans face, essentially, is a state of suspended animation. Not knowing what to expect, they hunker down and prepare for sorry circumstances they fear are dead ahead.
In other words, they are not optimistic, and a healthy economy requires people to feel good about their situation as well as their neighbor’s situation.
That’s one of the reasons why President Biden and the Democrats are fearful voters will turn against them in the Nov. 8 election. In that respect, the news of third-quarter economic growth is welcome.
But how much growth is necessary to turn the tide? People will know more on that front after the election.
In the meantime, third-quarter economic growth is welcome and, let everyone hope, reflective of more to come in the months ahead.