The Commerce Department has upwardly revised third-quarter real GDP to 3.1 percent. Previously, third-quarter growth was reported as 2.7 percent. With this revision, the third quarter of 2012 becomes the strongest quarter of the year and the third strongest since the economy began picking up in the summer of 2009.
As James Pethokoukis suggests, the increasing strength of the economy during this summer likely played a significant role in President Obama’s reelection. Perhaps Obama’s campaign machine, the Republican “war on women,” and Hurricane Sandy would have put Obama over the top had real GDP growth been, say, 2.1 percent. But Obama is no doubt happy he didn’t have to find out.
The third quarter figure has some relevance for the politics of the “fiscal cliff.” If fourth quarter growth is in line with the third quarter, the Democrats will have this potential narrative in the event no deal is reached: the economy was picking up steam in the second half of 2012 until we went over the fiscal cliff because Republicans wouldn’t agree to restore the Clinton-era tax rates for the very wealthy. It’s a narrative that could fuel a Democratic takeover of the House in 2014.