The GDP report is like a student’s GPA. And the American economic grade has been slipping.
In the week ahead, the first report card on the nation’s economy during the third quarter will be released. It is expected to show a small pickup in the annual growth rate as compared to the second quarter, but still, two percent is not very inspiring. If you had to give the economy a grade, give it a C.
That’s an improvement from the D the economy had been earning since late last year. It hasn’t grown faster than two percent since the third quarter of 2015. That was expected to change in the third quarter. It didn’t.
In August, at the beginning of the third quarter, the economy was predicted to grow by 3.6 percent. That’s a solid B and it would have marked the single strongest quarter for the economy under President Barack Obama.
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Instead, as the quarter wore on, the grade continued sliding. The Federal Reserve Bank of Atlanta tracks the GDP components in real time. It’s like seeing a student’s test grade right after the exam but before the report card. The Atlanta Fed thinks consumer spending wasn’t as strong as hoped for. Spending on stuff like new machinery, furniture and technology disappeared as the quarter progressed.
Maybe it is anxiety over the election that is affecting the economic performance. In September, one out of three companies surveyed by the Atlanta Fed reported that uncertainty over the outcome of the presidential election was “materially impacting” their businesses. That affects decisions on hiring and pay.
Whoever is elected president, and whichever party holds a majority in Congress, they will inherit a struggling student.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami. Follow him on Twitter @Hudsonsview.