CEA Chair Romer on Q2 GDP, Need to Do More

On Friday, Dr. Christina Romer, Chair of the Council of Economic Advisors, blogged on the second quarter GDP numbers:

Today’s report shows that real GDP, the total amount of goods and services produced in the country, grew at a 2.4% annual rate in the second quarter of this year, the fourth straight quarter of positive growth.  Growth in the first quarter was revised up to 3.7%, meaning that growth has averaged over 3% for the first half of 2010.  This solid rate of growth indicates that the process of steady recovery from the recession continues.  Nevertheless, faster growth is needed to bring about substantial reductions in unemployment.  Much work clearly remains to be done before the U.S. economy is fully recovered.  The comprehensive data revisions released with the report provide further evidence of just how severe the recession has been: the fall in GDP between 2007:Q4 and 2009:Q2 was 4.1%, making this the deepest recession since 1947.


Moderate, sustained GDP growth is a vast improvement over the terrible declines in GDP of late 2008 and early 2009, and reassuring given the turbulence in financial markets following debt problems in Europe.  However, growth is below the rapid rate of increase needed to bring the unemployment rate down quickly.  For this reason, it is essential that Congress take the additional targeted actions that the President has recommended to further stimulate growth and job creation, such as increased lending and additional tax cuts for small businesses, aid to state and local governments to prevent the layoffs of hundreds of thousands of teachers, firefighters, and police, and tax credits to promote energy efficiency and clean energy manufacturing.

Passing the modest provisions that Dr. Romer lays out at the end of her post is of the highest importance. A week ago Friday, NDN published a paper about this and other near-term downpayments on a longer-term agenda. Additionally, we strongly encourage members of the Senate to vote in favor of the state aid package coming up tonight.