Growth

This is the time that tries economists’ models. It has become the fashion at this time of year for forecasters to opine on the growth of GDP, the level of unemployment, the inflation rate next year—to at least one decimal place.

This is a good time to see where we have come during the year now coming to a close. Some things haven’t changed very much, or so it might seem. When the year began, households reported that 142 million Americans held jobs; right now, 143 million are in work. The labor force participation rate—the portion of workers in the labor market—was 63.7 percent when we (or some of us) were sleeping off New Year’s Eve hangovers, and now stands at 63.6 percent.

Three sorts of players will determine the near-term future of the American economy: consumers, businessmen, and politicians.

Republicans never miss an opportunity to miss an opportunity.  In 2010, they failed to win the Senate when it was theirs for the taking. Now they’ve lost the White House to President Obama, despite his poor record and the likelihood things won’t get any better in his second term.  And they failed again to capture the Senate, though a takeover was initially thought to be a cinch.

One thing is certain in these waning hours of the presidential and congressional election campaigns: it is Barack Obama and the current members of Congress who will have to make the initial decision on what to do about what we have come to call the fiscal cliff.

There are two U.S. economies. Well, not really. But there is the economy reported in the New York Times as part of its pre-election coverage, and far different one reported in the authoritative financial press.

Until now, most forecasters have been framing the assumptions underlying their projections on what they assume a reelected Barack Obama would do about taxes, appointments to the Federal Reserve Board, spending, the deficit and a host of other policies. Suddenly, they are back to the drawing board. Polls are showing something inconceivable to the American media and foreign observers: Mitt Romney is closing in on the president, and might even hold a slight lead.

The average GDP growth for the first three quarters of this year is 1.77 percent, according to data released by the the Bureau of Economic Analysis this morning. That is less than half of what the White House predicted GDP growth would be this year, and less than a third of what the Obama administration projected when it first took office.

In February of 2012, President Obama released a proposal to cut the corporate tax rate by 20 percent—bringing the current corporate rate down from 35 percent to 28 percent (and to 25 percent for manufacturers). But according to Robert Pozen, a senior fellow at the liberal-leaning Brookings Institution, President Obama won’t say how he will pay for his $1.3 trillion dollar corporate tax reform plan.

Friday’s jobs report might, but only might, have been the last one that will have any effect on the race to the White House.

Zerohedge reports on the latest GDP numbers:

Applications for U.S. jobless benefits fell by 3,000 to a seasonally adjusted 382,000 in the week ended Sept. 15, the Labor Department said Thursday ...  Economists surveyed by MarketWatch expected claims to drop to 375,000. I The average of new claims over the past month, meanwhile, rose by 2,000 to 377,750, the highest level since late June.