There is no doubt that the economy has languished in its recovery from the Great Recession, which ended more than five years ago. But signs are emerging that it is finally shaking free the weight of President Obama’s anti-growth policies.
The latest bit of good news is that the economy grew at 5 percent in the third quarter (July 1 to Sept. 30) of this year. This is the strongest growth of any quarter since the recession ended in June 2009. The economy grew at 4.6 percent in the second quarter, so the economy appears to be picking up steam.
Growth was driven primarily by increases in consumer spending, business investment, government spending and exports.
Five percent is robust growth, but the economy still has not experienced a breakout period of exemplary growth that is typical of recoveries from severe recession. For instance, a year after the similarly deep 1981 to 1982 recession, the economy had three successive quarters where growth exceeded 8 percent. In the second quarter of 1983, the economy grew an astounding 9.4 percent.
This shows that, although today’s numbers are good, the economy still needs a sustained period of even stronger growth to get back to where it should be.
Hopefully, the economy grows even faster in the fourth quarter of 2014, which ends in a week, so it can build on its current momentum. With gas prices low, the unemployment rate falling and consumers buying during the holiday season, there is every reason to expect it will.
A finally recovering economy does not mean policymakers in Washington can assume their job is done and ignore the economy. They still need to reform the tax code, reform entitlements, fix the problems caused by the Dodd-Frank financial reform legislation and clean up the damage wrought by overregulation during the Obama years to remove the biggest government-imposed barriers to prolonged economic growth.