While it is doubtful that the average voter even noticed it, the Obama administration last week received some positive economic news as further evidence that the worst economic downturn since the Great Depression is behind us and the nation’s economic is slowly, but steadily improving.
The Commerce Department says the gross domestic product grew 5.7 percent during the final three months of 2009. While still subject to revision, if these figures hold, it would be the economy’s strongest performance since 2003 and the second straight quarter of expansion following 2.2 percent in the period July to September.
Yet, despite the robust GDP finish, 2009 was a terrible year for the nation’s economy. During the year, the economy shrank 2.4 percent, the largest decline since 1946. At the same time, household purchases dropped 0.6 percent, the most in 35 years.
And even the robust growth in the GDP may not hold, at least not at the same pace. Sixty percent of that increase was from businesses rebuilding inventories they slashed during the recession.
There was a steep 18.1 percent increase in exports during the quarter. In his State of the Union address, President Obama promised to double exports over the next five years to generate 2 million jobs. If the economy grows as hoped, the dollar will strengthen, raising the price of U.S. exports, and so will U.S. demand for imports.
Economists predict a 2.5 percent or less increase for the GDP over the year. That’s less than overwhelming, but far better than what we’ve had.
While most Americans do not fully understand the gross domestic product and what it means, there is one economic statistic that virtually everyone understands and that’s the unemployment rate. As long as the nation’s unemployment rate is stuck at 10 percent, and may get worse before it gets better, average Americans will remain convinced that the recession has not ended.
Employers still aren’t hiring. Wages are stagnant. And consumer spending, which accounts for 70 percent of the economy, increased only 2 percent during the quarter. Replacing the 7.2 million jobs lost during the recession will be a formidable task.
Until every worker who wants a job and is able to do it has one, the recession will not truly be over.
