In it, but not of it. TPM DC
It was the best quarter of the year, with some important improvements, but likely still not yet enough to erase the losses from the Great Recession, economists say. Gross domestic product grew at 1.8 percent in the third quarter.
The crux of the development was consumer spending and business inventory.
"The big story is inventories," Dean Baker, co-director of the Center For Economic and Policy Research, told TPM. "They added almost 2 percentage points to growth in the quarter -- they subtracted 1.4 percentage point in the [previous] quarter."
Investment in equipment and software, Baker noted, is approaching pre-recession levels, with its share at 7.6, as opposed to 8.0 percent before the downturn.
But, Stone added, "Final sales grew very slowly in the final quarter, by just 0.8 percent. They were up a lot in the third quarter."
The two economists also pointed out that shrinking government spending was a drag on the economy, in part because government jobs were lost on federal, state and local levels.
Stone continued that the situation in Europe could still have a major impact on the U.S. economy; meanwhile, he said at home it's critical that Congress extend the payroll tax cut and unemployment insurance.
"If that doesn't happen that would be a hit to the economy for sure," he said.