Economy Grows 3.2%: Not Quite Good Enough?

Very different readings of the same number

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The U.S. economy is a complicated thing, particularly as it struggles to recover from the recession that began in 2007. That may help explain why one number--the report that U.S. GDP grew by 3.2 percent in the first quarter of 2010--is drawing such widely disparate reactions. From cries of joy to lamentations of doom, here are the takes.

  • Warren Buffett: We're Back!  The Associated Press reports that the influential billionaire "says the economy is finally starting to show signs of significant improvement." The A.P. adds, "Buffett says any improvement before last month had been slow, but March brought a real change, especially in the U.S. and Asia."
  • Not Enough For Recovery   MoneyWatch's Mark Thoma frowns. "A 3.2 percent growth rate is not large enough to make up for the lost GDP during the recession," he writes. "While some are reading this as encouraging news, and positive growth is certainly better than the alternative, a growth rate of 3.2% is not enough to make up for lost ground. That is, the economy is currently operating at below its potential level. A growth rate of 3.2% will keep things from getting worse -- the distance between the actual level of output and its potential level will not increase -- but the distance will not decrease either."
  • What the Growth Will Change  The Atlantic's Derek Thompson explains the effects. "So yes, things are getting better. Inventories were replenished in late 2009, and consumers started spending them down in early 2010. We should expect disposable incomes to start rising in the next few quarters as steady consumer demand encourages businesses to hire again and to full-time their part-timers. Then again, the housing market -- which helped drive the last boom -- is still in the worst shape in the last 50 years. That's a heavy anchor."
  • Voters Want to Hear About Employment  The New York Times' Catherine Rampell writes, "While the expansion in output was welcome, it still has not brought the level of hiring growth needed to recover ground lost during the recession. Speaking in the White House Rose Garden, President Obama acknowledged that many Americans might find little comfort in Friday's numbers because ''you're hired' is the only economic news they're waiting to hear.'"
  • This Is Good, But Could Be Better  Liberal blogger Matthew Yglesias writes, "Look, a 3.2 percent rate would be strong performance for an economy operating in a normal context. It's consistent with recovery. Everyone who said the Obama/Bernanke/Geithner anti-crisis measures were going to sink the global economy was wrong. But given the quantity of idle resources and idle people in the United States, it should be possible for us to put together several 5+ percent quarters in a row."
  • Just Short of Projections  Conservative blogger Ed Morrissey recalls that "Obama and Democrats insisted that the 5.7% annual growth rate in the fourth quarter of 2009 showed that their stimulus plan had set the American economy back on track for rapid growth and job creation. The administration needed a big number for 2010 to allay fears that unemployment would stagnate at the current high levels for the long term. Unfortunately, they didn't get it, with the 3.2% annualized GDP rate for the first quarter of 2010 falling below analyst expectations" of 3.5%.
  • Cause: Consumer Spending  Time's John Curran writes, "American consumers are finally opening up their wallets. Spending by consumers rose by 3.6% in the first three months of 2010, more than double the 1.6% rate of the fourth quarter. That's the biggest gain in this gauge in three years. More importantly, it is a subtle but significant shift in the drivers of economic growth." Salon's Andrew Leonard agrees. The Atlantic's Dan Indiviglio explores this in-depth.
This article is from the archive of our partner The Wire.