Washington, D.C. — Center for American Progress Economist Adam Hersh will be available tomorrow morning to discuss the third-quarter GDP report. To arrange time to speak with Adam, please contact Katie Peters at [email protected].
In anticipation of the Q3 GDP report, Hersh released the following statement this afternoon outlining what he expects to see in tomorrow’s BEA report:
Tomorrow’s third-quarter GDP numbers from the Bureau of Economic Analysis will show us where the U.S. economic recovery was through September—before conservatives shut down the federal government and threatened financial default in October, but after a nearly three-year crusade toward spending cuts. Consensus forecasts see growth slowing to a 2 percent rate from 2.5 percent the quarter before.
Last February, CBO estimated that 2013’s sequestered spending cuts would shave 1.5 percent off growth this year; however, at the operational level, most of the required cutting has been deferred. Thus, with government statistics now catching up from the shutdown, tomorrow’s data will provide a new read on how much spending cuts are binding on U.S. economic growth.
To date, as the Recovery Act and related stimulus spending wound down at the end of 2010 and spending cuts took over, shrinking government investment and public services have subtracted on average 0.5 percentage points from U.S. economic growth. The impact of spending cuts leaves a big hole in aggregate demand, most notably felt by households: After growing 1.9 percent from the beginning of 2009 to the beginning of 2011, disposable income per capita grew less than 1 percent from 2011 through the second quarter of 2013.
Congress could eliminate this fierce headwind on economic recovery today with the swipe of its gavels by replacing future sequester cuts with a growth-oriented approach to managing U.S. financial sustainability.
To speak with Adam Hersh about the GDP report, contact Katie Peters at [email protected] or 202.741.6285.
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