Economy Grows by 0.6 Percent in First Quarter
My first thought upon reading that, the U.S. economy grew at 0.6 percent for the first quarter was Woohoo! We’re not technically in a recession.
Matt Yglesias had a similar thought and uses it to “once again remind people that the big sources of uncertainty in the general election have to do with objective reality rather than candidate-attributes or campaign tactics. That stuff can matter, but the evidence suggests that it doesn’t matter as much as the fundamentals, and the fundamentals are, in a sense, unknowable.”
While I think that’s mostly right, it also causes me to slightly rethink my initial reaction to the economic news. That is, the economy is what it is. The numbers probably don’t matter much.
Whether aggregate growth is minus 0.6 percent or plus 0.6 percent really makes very little difference in most of our objective realities but, technically, the former has us edging into recession while the latter is merely lackluster. Further, as we saw in the 1992 election, when incumbent George H.W. Bush was being excoriated for, correctly, pointing out that we weren’t in a recession — and then we got adjusted figures after the election showing that we were in fact in the beginning of an economic boom — objective reality probably doesn’t matter much anyway. Rather, it’s the public perception of reality that matters.
With gasoline prices soaring, worries over the housing market, and so forth, most people think the economy is in bad shape. Whether the release of new figures describing the economy will turn around that perception, I don’t know.