October 26, 2012

Economy Grows Too Slow to Support Solid Job Growth

Keith Hall

Former Senior Research Fellow
Summary

The economy grew 2.0 percent in the third quarter, an increase over last quarter but too slow to support solid job growth. There was a modest acceleration in consumer spending but all of the increase in GDP growth came from the biggest increase in federal government spending in over two years.

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Mercatus Center scholar and former BLS commissioner Keith Hall finds today’s GDP report concerning:

“The economy grew 2.0 percent in the third quarter, an increase over last quarter but too slow to support solid job growth.  There was a modest acceleration in consumer spending but all of the increase in GDP growth came from the biggest increase in federal government spending in over two years. 

“Business confidence remains a real concern as investment in equipment and software failed to grow for the first time since the end of the recession.  We are now on pace for just 1.7 percent growth for the year, slower than either of the last two years and well below the administration forecast of 2.6 percent.”