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Economy Needs to Grow Faster

Our GDP growth rate indicates we are not in a double-dip recession but is insufficient to reduce the 9.1 percent unemployment rate and remains below our historical GDP growth rate average.

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The U.S. economy in the third quarter registered a 2.5 percent annual growth rate—an important indication that we are not slipping back into recession. This pace of growth in our gross domestic product—the largest measure of our economy—indicates we are not in a double-dip recession but is insufficient to reduce the 9.1 percent unemployment rate and remains below our historical GDP growth rate average of 3 percent levels.

One reason our economy is not growing faster is that government spending added nothing to economic growth in the third quarter. The other is that the trade deficit continues to weigh down the U.S. economy. Enacting President Barack Obama’s American Jobs Act would be one step in the right direction. Congress needs to build on the clear success of the American Recovery and Reinvestment Act of 2009, which boosted growth, helped bring down unemployment, and ended the Great Recession of 2007–2009.

Another step would be policies to boost U.S. exports and rebalance our trade. Yet an overvalued currency, the continuing economic crisis in Europe, and the slowdown in China will limit our ability to export our way out of unacceptably high unemployment.

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