GDP is estimated to have grown at an annualized rate of 5.7 percent in the fourth quarter of 2009. This represents the largest growth rate in six years. It means not only that the recession is over and probably has been for some time, but that the recovery may well be robust.
The increase is said to be in part a function of a steep drop in the pace at which businesses were cutting back on their inventories. Although that’s a positive development, it means that inventories will not add much to growth in the coming quarters unless businesses believe they cut back too far during the downturn and decide to actively rebuild their inventories.
On the other hand, increased consumer spending also played a big role in the economy’s growth. It rose at a 2 percent annual rate, which was enough to add 1.4 percentage points to total GDP
If the economy is headed for a healthy recovery, Republicans should perhaps be a little less triumphalist about President Obama’s current difficulties. To non-ideological voters (i.e. most of the electorate) nearly everything political looks different when we go from bad times to good, or vice versa. Think of the difference in how things seem during a long, bumpy airline flight and during a luxury cruise.
Think also about the State of the Union Obama would be capable of giving if the unemployment rate fell to close to half of what it is now. I submit that the demagoguery that was so easy to shrug off on Wednesday would be considerably more threatening in that context.
The Republicans should have a good November 2010 notwithstanding the recovery. First, the employment situation probably has a long way to go before it stops being a liability for Democrats. And, at least as importantly, voters may well be intent on restoring more balance between the parties quite apart from economic considerations.
It’s what might happen in 2011 and 2012 in light of a recovery that Republicans should start thinking about.
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