And those are the old numbers. With these new calculations, the GDP is understood to be larger -- but Federal spending isn't. So the Federal deficit as a percentage of GDP -- a ratio that's raised alarm in certain circles -- is even smaller than we thought.
5. They're saying the recession wasn't as bad as originally thought.
A number of news reports about the new calculations led with the idea that the recession wasn't as severe as we thought, and that the recovery's been slightly better than we thought.
That's true -- on a macro level. But with growing wealth inequality, that doesn't change the reality for the majority of Americans. A lot of people are hurting, and nothing in these calculations changes that.
6. It was still enormous.
This was still a devastating downturn, the most severe in modern memory. A record number of people are seeking work, and the number of people living in poverty has skyrocketed.
This is still a national economic emergency for tens of millions of Americans.
7. We need more government spending.
Growth for the first quarter of 2013 was revised downward to a miserable 1.1 percent, driven in large part by reduced government spending. Initial figures for the second quarter, which were released today, were better than expected at 1.7 percent. That is, however, still an anemic figure.
One reason growth was better than expected is that government spending didn't drop as quickly as projected. It did drop, however, and that hurt the economy.
(Non-residential and residential investments also helped on the growth side, as did rising inventories and slightly better-than-expected consumer spending.)
8. We need more demand.
Consumer confidence, which had been rising, declined this month. Consumers believe they're cutting back, even though spending has actually increased, which suggests pent-up demand. And since rising home prices account for a large chunk of that increased spending, they're probably right.
Consumer spending is a large part of the US GDP, compared to other developed nations or to earlier decades in this country. We need consumer confidence and consumer spending if our economy is to grow.
9. The weak link is Federal spending.
What will get us there? The first and second-quarter numbers tell the story: Federal spending is a key engine of the economy in times like these. Instead of cuts, we should invest -- in good jobs. That will increase consumer spending and consumer confidence.
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