GDP Grew at Anemic 1.7% Rate Last Quarter. Thanks, Sequester!


The economy sputtered along in the second quarter, growing at an annual rate of 1.7 percent. Whether you consider this good news or bad probably depends on what you expected the impact of the sequester and the fiscal cliff to be. If you figured that $2 trillion in extra austerity measures would tank the economy completely, then a gain of 1.7 percent looks pretty good. If you figured it would have a modest effect, then 1.7 percent is probably about what you expected.

As I recall, CBO estimated that the sequester alone would cut about 0.8 percent from GDP growth. The fiscal cliff deal might have cut another 0.4 percent or so. If they were right, it means that 2.9 percent growth has been pared back to 1.7 percent. My rough eyeballing of the figures suggests to me that this was probably an overestimate, but probably only by a bit. I’ll bet that without the latest round of austerity, growth would have been in the range of 2.5 percent.

So we’re recovering slowly and austerity is hurting. Beyond that, there aren’t a lot of fascinating nuggets to be gleaned from this quarter’s report. However, this is the first quarter that BEA has produced its long-awaited new measurement of private investment in intellectual property products, and there are some interesting tidbits there. For more on this, see Dylan Matthews’ writeup over at Wonkblog. 

MORE HARD-HITTING JOURNALISM

In 2014, before Donald Trump announced his run for president, we knew we had to do something different to address the fundamental challenge facing journalism: how hard-hitting reporting that can hold the powerful accountable can survive as the bottom falls out of the news business.

Being a nonprofit, we started planning The Moment for Mother Jones, a special campaign to raise $25 million for key investments to make Mother Jones the strongest watchdog it can be. Five years later, readers have stepped up and contributed an astonishing $23 million in gifts and future pledges. This is an incredible statement from the Mother Jones community in the face of huge threats—both economic and political—against the free press.

Read more about The Moment and see what we've been able to accomplish thanks to readers' incredible generosity so far, and please join them today. Your gift will be matched dollar for dollar, up to $500,000 total, during this critical moment for journalism.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.