Q3 Growth Rate Revised Downward to 2.2 Percent

The 2.8 percent annualized growth rate for the third quarter that was initially reported wasn’t adequate to create the kind of “catch-up” effect we need to restore health to the labor market, but it was a decent number nonetheless. Now it’s been revised downward to just 2.2 percent:

The Commerce Department’s final estimate showed gross domestic product grew at a 2.2 percent annual rate instead of the 2.8 percent pace it reported last month. Analysts polled by Reuters had forecast the report to show GDP, which measures total goods and services output within U.S. borders, unrevised at a 2.8 percent growth rate in the third quarter.

It was still the fastest pace since the third quarter of 2007 and ended four straight quarters of decline in output. The resumption of growth in the July-September period probably ended the most brutal recession since the 1930s.

I think that this, rather than anything related to health care, is the real political challenge heading into the midterms. I don’t think you can stand in a country where unemployment is stagnating above nine percent and say “the health care system will be much better in 2014!” Unfortunately for congress, there’s arguably a limited amount they can really do if the Fed doesn’t want to acknowledge that the path we’re currently on is a bad one.