October 26, 2012
Third-Quarter Increase in GDP Growth Came From the Biggest Increase in Government Spending in Over Two Years
Veronique de Rugy
Senior Research FellowKeith Hall
Former Senior Research Fellow
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To speak with a scholar or learn more on this topic, visit our contact page.According to the Bureau of Economic Analysis, the economy grew by a modest 2 percent in the third quarter of 2012. While this was stronger growth than the preceding quarter, all of the increase in GDP growth came from the biggest increase in federal government spending in over two years. Federal government spending rose 9.6% at an annual rate in the third quarter. It is worth noting that government spending fell by 0.1 percent in the second quarter. However, in the third quarter, it grew by 0.7 percent. Growth in the private sector fell by 0.1 percent to 1.3 percent in the third quarter—down from 1.4 percent in the second quarter.
Economy Grows Too Slow to Support Solid Job Growth
Keith Hall