Lucy and the Economic Football
The White House shows little sign of worrying about a dip in growth and how it might affect the unemployment rate, which has fallen by a percentage point since the year began but still sits at 8.8 percent, danger territory for an incumbent president seeking reelection.
Obama advisers largely believe, instead, that the economy has moved on from what White House officials call a “Phase 1” recovery—in which the government was forced to cut taxes and spend heavily to pump up consumer demand and rescue the nation from the brink of another Great Depression.
Now, the officials believe, the recovery has reached “Phase 2,” where the prospects of a double-dip recession are slim, expanding growth can survive a hit in government spending, and the total level of spending cuts is less important than the composition of them. (That reasoning helps explain why the White House was willing to agree to $38.5 billion in cuts to the current-year budget in negotiations last week, while insisting on protecting education and research programs the administration sees as key drivers to future growth.)
I hope they’re right — but as I recall, they believed exactly the same thing around this time last year. And remember, here’s how job growth has been going: