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News from EPI GDP Growth Is Unlikely to Spur Real Improvement in the Labor Market

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The Bureau of Economic Analysis (BEA) reported today that gross domestic product (GDP)—the widest measure of overall economic activity—grew at a 2.8 percent (annualized) rate in the third quarter of 2013. This was a slight increase relative to the second quarter’s 2.5 percent growth rate.

In his analysis, EPI Research and Policy Director Josh Bivens points out that there is little reason to celebrate today’s numbers. The GDP numbers “remain disappointingly weak for an economy with so much productive slack,” writes Bivens. “Further, growth in final demand—GDP stripped of the contribution of volatile inventory investments—grew at just a 2.0 percent rate in the third quarter. This arguably better indicator of underlying economic strength indicates that growth in the second quarter is essentially on the same disappointing trend that has characterized most of the recovery phase since the official end of the Great Recession.”

“All in all,” Bivens concludes, “this is a status quo GDP report.” It is still the case that the economy needs more support from both fiscal and monetary policy to generate growth sufficient to spur real improvement in the U.S. labor market. “The message of today’s GDP report is clear: There was no uptick in growth even before this fall’s fiscal dramas, and the economy remains weak with large amounts of slack.”