Robert Pollin, professor of economics at the University of Massachusetts Amherst, gives a good high-level discussion of why the GDP results for last quarter were such a train wreck. Remember that analysts and economists were blindsided; no one expected to see GDP fall at that rate. As we wrote, the tendency among pundits has been to treat the results as of not much concern, since that period is past and some of plunge can be attributed to one-off factors, most importantly, abnormally cold weather. But Pollin explains why this is insufficient and why the bad results highlight how wrongheaded current austerity policies are.
A key section of Pollin’s remarks:
What happened in the last quarter was broadly consistent with the weakness of the recovery, just to give some evidence on that. In the previous eight recessions that the U.S. has had since World War II, you see strong recoveries after the recession ends, so that, say, three months after the recession ends, the economy is growing on average at about four and a half percent a year. That’s positive four and half percent growth on average. In this recession, after the recession ends in 2009, average growth has only been 2.3 percent–half the rate of improvement that we’ve seen in the eight previous recessions. So we could say that this massive one-quarter contraction was a blip, but it wasn’t just a blip, because it comes amid a very weak recovery that’s been going on now for five years.