The White House downplayed new statistics today that showed economic growth slowing down to 1.5 percent in the second quarter of the year, stressing that the Bureau of Economic Analysis report still shows growth.
Real GDP growth in the second quarter of last year was 2.5 percent. Last quarter, growth was 2.0 percent — a Commerce Department revision from the previous 1.9 percent number.
“Over the last three years, the economy has expanded by 6.7 percent overall, and the private components of GDP have grown by 9.9 percent,”said Alan B. Krueger, chairman of the Council of Economic Advisers. “While the economy continues to move in the right direction, additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007.”
Sluggish economic growth means that the 8.2 percent unemployment rate is likely to remain stagnant.
Krueger blamed the slowdown in part on dwindling stimulus funds.
“Since the Recovery Act funds have been phasing out, however, declining State and local government activity has subtracted from GDP,” he said. “Indeed, today’s report indicates that State and local government purchases have declined for 11 straight quarters, the longest streak ever recorded since the official record of quarterly data began in 1947.”
The White House used the report as a plus for President Obama’s push to extend the Bush-era tax cuts for lower- and middle-income brackets, while raising taxes for the wealthy to Clinton-era rates.
“The Senate passed the President’s plan this week and President Obama has said that as soon as the House will act he will sign it right away in order to give certainty and security to middle class families,” Krueger said. “Extending these tax cuts would provide more certainty for the economy for 98% of American families and 97% of small business owners.”