JEFFREY BROWN: An important snapshot of the country’s economic growth was released today, a week-and-a-half before the election. With positive, but still slow, improvement, the White House and the Romney campaign offered different assessments.
A late boost in consumer spending was a major factor in the economic news from the Commerce Department. Gross domestic product, the broadest gauge of the country’s economic health, grew at a 2 percent rate from July through September, slightly better than the 1.8 percent economists had predicted, and an improvement over the 1.3 percent growth in the previous quarter.
Another positive sign today, a survey from the University of Michigan shows consumer confidence this month reached its highest level since September 2007, three months before the recession began.
But the GDP growth is still considered by economists to be too weak to bring a quick uptick in jobs.
And on the stump in Ames, Iowa, today, Mitt Romney seized on that aspect of the new report.
MITT ROMNEY (R): Today, we received — by the way — the latest round of discouraging economic news. Last quarter, our economy grew at just 2 percent.
After the stimulus was passed, the White House promised that the economy would now be growing at 4.3 percent, over twice as fast. Slow economic growth means slow job growth and declining take-home pay.
That’s what four years of President Obama’s policies have produced. Americans are ready for change, for growth, for jobs, for more take-home pay, and we’re going to bring it to them.
(CHEERING AND APPLAUSE)
JEFFREY BROWN: After two days of intense campaigning, President Obama was off the trail today. He didn’t directly address the new data in a radio interview, but pushed back on Romney’s criticism.
PRESIDENT BARACK OBAMA: The fact of the matter is that Gov. Romney’s economic policies are reverting back to the same policies that I inherited, that led us to the slowest job growth in 50 years, record deficits, and the worst economic crisis since the Great Depression.
What Gov. Romney’s offering is a return to policies that have failed us in the past. He’s now talking about them as big changes. They’re not big changes. They’re a repeat, a relapse of things that haven’t worked for American families for over a decade now.
JEFFREY BROWN: With both sides promising to revitalize the economy, there’s one more important report yet to come. The jobs numbers for October will be released next Friday, just four days before voters head to the polls.
Earlier today, I talked about the new government economic report with Hugh Johnson, head of an investment and advisory firm in Albany, N.Y.
First, the good news. Where is the growth coming from?
HUGH JOHNSON, Hugh Johnson Advisors: Well, you know, there are a lot of places. But I think probably the best news is that, you know, consumer spending is about 70 percent of our economy. We saw that strengthen in the third quarter. That’s very good news.
I think there are a couple of really parts of that — first of all, residential real estate or housing, we know the numbers have been getting better when we look at housing starts or existing home sales. That showed up in the report as well.
Residential real estate is improving. And that’s, of course, helping consumer confidence and helping consumer spending. So I think those are the two bright spots.
The big surprise in this report in my view was the increase in government spending. That wasn’t at the state level. That was at the federal level. And that was primarily due to an increase in defense spending. I think that that was the biggest surprise and a pleasant surprise.
JEFFREY BROWN: But, on the other hand, this is still very slow growth, right?
HUGH JOHNSON: Yes, that’s true, when you compare it to the — sort of the kind of growth rates you should see for the economy at this stage of a recovery. It should be closer to 3 percent. We’re at 2 percent.
JEFFREY BROWN: It looks as though a new area of weakness was in exports. What’s going on there?
HUGH JOHNSON: Yes, there was clearly a slowdown, a negative number on exports. That is primarily due to the fact that we’re doing less business with China. The economy of China has slowed. The economy of Europe has slowed. And that showed up in the numbers.
JEFFREY BROWN: Hugh, I’m not going to make you into a political analyst, but from where you sit, does it look like there’s something here for both candidates?
HUGH JOHNSON: Yes, I think there is something there for both sides.
I think on the one side, now President Obama can certainly point to the fact that the economy did better in the third quarter than it did in the second quarter and that we’re sort of on the right trajectory or on the right pathway towards recovery. Things are getting a little bit better.
At the same time, there’s no question that Gov. Romney could say, well, look, we might be headed in the right direction, but the truth is, is that economic growth is extraordinarily anemic when compared to other postwar recoveries, and not the kind of — not the kind of numbers or economic growth that we need to really, really make progress or to put a dent in the high unemployment rate and get some people back to work.
JEFFREY BROWN: Hugh Johnson, thanks a lot.
HUGH JOHNSON: You’re welcome.