Romer on GDP

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CEA Chief Christina Romer blogs on the GDP numbers:

After four consecutive quarters of decline, positive GDP growth is an encouraging sign that the U.S. economy is moving in the right direction. However, this welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered. The turnaround in crucial labor market indicators, such as employment and the unemployment rate, typically occurs after the turnaround in GDP. And it will take sustained, robust GDP growth to bring the unemployment rate down substantially. Such a decline in unemployment is, of course, what we are all working to achieve.

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One of the things that makes American politics weird is that nobody in the administration is really supposed to talk about the fact that this is much more up to Ben Bernanke than it is up to Barack Obama. There’s disagreement as to whether expansionary monetary policy should be halted as soon as GDP starts growing or else should be continued until we have unemployment a few percentage points lower. This is a very important debate. But it’s a debate over which the country’s elected officials have extremely little formal influence.