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GDP: Obama’s Predictions Fall Short Yet Again

RNC Communications - January 27, 2012

GDP Growth Was Worse Than Expected In 2011 And Will Continue To Slow In 2012

2011 Q4 GDP Grew At 2.8 Percent, Less Than Predicted. “Gross domestic product, the value of all goods and services produced, climbed at a 2.8 percent annual following a 1.8 percent gain in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg News called for a 3 percent increase. Excluding a jump in inventories, growth was 0.8 percent.” (Alex Kowalski, “U.S. Economy Grows 2.8%, Less Than Forecast,” Bloomberg, 1/27/12)

“The Commerce Department Said Friday That The Economy Grew Just 1.7 Percent Last Year, Roughly Half Of The Growth In 2010 And The Worst Since The Recession.” (Martin Crutsinger, “Economy Grew Modest 2.8 Pct. In Q4, Best In 2011,” The Associated Press, 1/27/12)

Growth Is Expected To Decrease To 1.9% In The First Quarter Of 2012. “As a result, most economists expect companies to cut back on inventories in the first three months of 2012. Growth is expected to slow to 1.9% in the first quarter, the latest MarketWatch forecast shows.” (Jeffry Bartash, “Economy Expands 2.8% In Fourth Quarter,” MarketWatch, 1/27/12)

  • “We’re Going Into 2012 With Less Momentum Than People Were Thinking.” “‘We’re going into 2012 with less momentum than people were thinking,’ said Michael Hanson, a senior U.S. economist at Bank of America Corp. in New York. ‘Income growth was modest and the savings rate came down, and those are not sustainable ways to get consumers to contribute going forward.’” (Alex Kowalski, “U.S. Economy Grows 2.8%, Less Than Forecast,” Bloomberg, 1/27/12)

Obama Predicted 2011 Q4 Growth Would Be Nearly Six Percent

The Obama Administration Predicted In Their FY2010 Mid-Session Review That 2011 Q4 GDP Would Be 5.8 Percent.  (Office Of Management And Budget, “Mid-Session Review: Budget Of The U.S. Government Fiscal Year 2010,” The White House, 8/25/09)

FLASHBACK: In 2009, Economists Warned That Obama’s Economic Predictions Were Too Optimistic. “President Barack Obama’s economic forecasts for long-term growth are too optimistic, many economists warn, a miscalculation that would mean budget deficits will be much higher than the administration is now acknowledging.” (Jeanne Cummings, “Some Economists Warn Barack Obama’s Economic Predictions Too Optimistic,” Politico, 7/14/09)

  • Economic Experts Described The Obama Administrations Forecasts As “Rosy” And “Fantasy.” “But a series of POLITICO interviews in recent days with independent economists of varied political stripes found widespread disdain for Obama’s first round of assumptions, with some experts invoking such phrases as ‘rosy’ and ‘fantasy.’” (Jeanne Cummings, “Some Economists Warn Barack Obama’s Economic Predictions Too Optimistic,” Politico, 7/14/09)

The Obama Administration Was Forced This Year To Lower Their Forecast For Economic Growth By A Full Percentage Point. “The figures from the White House budget office predict that the economy will grow by just 1.7 percent this year, a full percentage point less than the administration predicted at the beginning of 2011. The economy grew by just 0.7 percent in the first half of the year, the slowest pace since the recession ended two years ago.” (Andrew Taylor, “$1.3T Deficit Projected As Economy Cools,” The Associated Press, 9/1/11)

Slow Economic Growth Will Hamper Recovery For Years To Come

“At This Rate, We’ll Never Reduce Unemployment.” “Even so, both figures were below the average speed of economic expansion in the United States since World War II. And it would take above-average growth to recover the ground lost during the Great Recession. ‘At this rate, we’ll never reduce unemployment,’ said Justin Wolfers, an economist at the University of Pennsylvania. ‘The recovery has been postponed, again.’” (Catherine Rampell, “U.S. Recovery Speed In Late ’11, Date Show,” The New York Times, 1/27/12)

“The Federal Reserve Signaled This Week That A Full Recovery Could Take At Least Three More Years.” “The Federal Reserve signaled this week that a full recovery could take at least three more years. In response, it said it would probably not increase its benchmark interest rate until late 2014 at the earliest - a year and a half later than it had previously said.”   (Martin Crutsinger, “Economy Grew Modest 2.8 Pct. In Q4, Best In 2011,” The Associated Press, 1/27/12)

  • The OMB Says That Growth Has “Not Been Strong Enough To Bring Down The Unemployment Rate To An Acceptable Level.” “In sum, economic growth and job creation, while positive, have not been strong enough to bring down the unemployment rate to an acceptable level.” (“Fiscal Year 2012 Mid-Session Review,”Office Of Management And Budget, 9/1/11)

“The Anemic Recovery Has Left Many Businesses In A State Of Limbo.” “The anemic recovery has left many businesses in a state of limbo. Companies that survived the recession by laying off workers and slashing costs are now in many cases earning record profits. But with demand still weak and the outlook uncertain, some are reluctant to ramp up production or take on more employees.” (Ben Casselman, “Recovery Doesn’t Feature Typical Snap Back To Growth,” The Wall Street Journal, 1/26/12)

  • The Economy Has Not Snapped Back Like It Has After Previous Recessions. “After the early 1980s recession, for instance, the U.S. notched five straight quarters of over 7% growth, quickly putting the economy back on its previous expansion path. That hasn't happened this time. On Friday, the government releases its preliminary snapshot of economic growth in the final three months of 2011 and most economists expect it to show gross domestic product grew at an annual rate of about 3%.” (Ben Casselman, “Recovery Doesn’t Feature Typical Snap Back To Growth,” The Wall Street Journal, 1/26/12)

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