The Fourth Quarter GDP Drop

Last week’s report of a 0.1 percent decline in GDP was a reminder (for those who needed one) that there are multiple components of this big thing we call “the economy,” and that government spending is one of those components, and a significant one at that.  So when we squeeze and squeeze on that one component to make it smaller, guess what: the whole thing gets smaller, too, by that amount.  Surprise!

So at a time when our paramount objective should be growth and the jobs that come with growth, isn’t it foolish to be squeezing so hard on this major growth component, as the Republicans and what Krugman calls the “Very Serious People” are so insistent on doing?

• EJ Dionne: The Urgency of Growth
• Jonathan Chait: Honey, I Shrunk the Economy
• Dylan Matthews: The Only Chart You Need on the GDP Report
• BondDad: Guess What: Austerity Doesn’t Work in the US Either
• Brad DeLong: We Need More Government Spending Right Now, Not Less…
• Paul Krugman: Our Incredible Shrinking Government