On Thursday, the Bureau of Economic Analysis (BEA) released its advance estimate of U.S. Gross Domestic Product (GDP) growth for the third quarter of 2022, showing the first positive growth this year. The BEA estimated the GDP grew 2.6% in Q3, after contracting -0.6% in Q2 and -1.6% in Q1.
Democrats who had been cowering in advance of their midterms beating couldn’t believe their luck and bellowed in relief. “President” Biden’s Twitter account immediately puffed out its chest and crowed, “…But with today’s Third Quarter GDP Report, we got further evidence that our economic recovery is continuing to power forward,” wrote whoever is pretending to be Joe Biden:
For months, doomsayers have been arguing that the US economy is in a recession and Congressional Republicans have been rooting for a downturn.
But with today’s Third Quarter GDP Report, we got further evidence that our economic recovery is continuing to power forward.
— President Biden (@POTUS) October 27, 2022
The key word here is “power,” as in the power Europe is generating with its record purchases of oil and natural gas from the United States.
“But while GDP certainly recovered in the third quarter, when you break down what caused the jump, the outlook for the economy becomes far less optimistic,” notes Fortune:
The latest GDP numbers reflect a 14.4% surge in exports and a 6.9% drop in imports, which caused the U.S. trade deficit to drop dramatically, adding roughly 2.8 percentage points to GDP growth.
The increase in exports was a result of supply chains uncoiling, and the U.S. sending record volumes of oil, petroleum products, and natural gas to Europe amid the continent’s energy crisis, according to Bill Adams, Comerica Bank’s chief economist. And the decline in imports was caused by Americans spending more on services and less on goods, while U.S. retailers pulled back on spending owing to swollen inventories and recession fears.
Eugenio Alemán, chief economist at Raymond James, told Fortune that trade had been a major player in the GDP growth rate all year, with the large deficit pulling it down in Q1 and Q2, before flipping and giving it a boost for Q3. So while Democrats were gifted a shiny new October talking point, the reality underlying the rosy Q3 number is that U.S. productivity has otherwise continued to slow. The article goes on to note that actual sales to domestic U.S. buyers, home sales, and the amount people are able to save all sank in the third quarter.
“While GDP was a little better than expected, the underlying trend of economic activity continues to slow,” Alemán said, adding, “The economy will likely cool further near term.”
On the other hand, some Q3 bright spots included low unemployment, rising wages, and finally slowing inflation. But then again, don’t get too excited, because these perceived strengths mean the Fed will continue its aggressive interest rate escalation to keep beating down our historic inflation. And as we know, rising rates mean less investment, which means slower growth.
So while Democrats will pretend third-quarter growth means they’ve fixed everything and we are well on the way to prosperity, “a look under the hood shows a much grimmer picture of the U.S. economy, one that is clearly losing steam,” says Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “With the full effect of past and future Fed rate hikes still to be felt, the economy appears poised for a modest downturn in the first half of next year.”
Or, as Chris Low, chief economist at FHN Financial in New York, puts it, “GDP growth cannot be sustained without domestic private-sector growth.”
Related: Top Democrat Admits ‘All of Us Knew’ Their Party’s Policies Would Cause Inflation
My colleagues at PJ Media and other conservative outlets have long been howling about the Biden Collective’s cynical draining of U.S. strategic oil reserves to force a temporary, small drop in gas prices in order to buy midterm votes. U.S. fuel shortages will come into full flower this winter, as we all shiver in our cold, dark homes that we can’t afford to heat.
But as the whole 100% net-zero green renewables fantasy has yet to come to fruition, energy-starved Europe has little choice except to buy their fuel from wherever they can get it. Biden and Co. are only too happy to sell it to them. Forcing a positive U.S. trade flow to prop up the otherwise sagging domestic product is just one more incentive for Biden and the Democrats to keep the Ukraine War cooking and Russian oil from flowing. Say, did we ever find out who blew up those Nord Stream pipelines yet?
Join the conversation as a VIP Member