The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

The Commerce Department reports that the U.S.’s gross domestic product shrank by .1 percent in the fourth quarter of 2012. Initial reports are often revised, but this unexpected decline in the economy is a sharp reminder that the recovery — if it exists at all — is fragile and threatened by impending cuts in government spending.

Despite this shock, other economic indicators suggest a mixed outlook.

The day before the GDP report, the Dow Jones Industrial Average tested 14,000, a height not seen since 2007. Wednesday morning, ADP reported that the private sector created 192,000 jobs in January — analysts expected 175,000. According to The Conference Board, consumer confidence dove 8.1 percent in January following a decline in December. But according to Gallup, consumer confidence has surged to a five-year high.

What caused the shrinkage of GDP growth? The White House blames Hurricane Sandy, which disrupted and destroyed $44 billion in economic activity.

But cuts to government spending, a.k.a.”austerity,” also played a major role.

“A decline in government outlays and smaller gain in stockpiles subtracted a combined 2.6 percentage points from growth,” reports Bloomberg‘s Shobhana Chandra & Michelle Jamrisko. In particular, Defense spending erased any growth that the private sector racked up in the last three months of the year. “Government outlays dropped at a 6.6 percent annual pace from October through December, subtracting 1.3 percentage points from GDP. The decrease was led by a 22.2 percent fall in defense that was the biggest since 1972, following the Vietnam War.”

“Austerity, it turns out, detracts from growth,” writes The Daily Beast‘s Daniel Gross.

The Guardian’s Heidi Moore laid the blame for the shrinking economy on the budget standoff in Washington, D.C. “Washington’s idiotic battle over the fiscal cliff is what [made the economy shrink],” she writes. “The automatic tax hikes and government spending cuts set to go into motion would have hurt a wide swath of American people. CEOs were particularly loud about the need for Washington to come to some kind of decision.”

However, reports suggest businesses didn’t cut back as a result of the “fiscal cliff.”

Cuts in government spending, which Republicans insisted would lead to economic growth, have led to shrinking economies across Europe. The U.S. had been able to maintain growth with the federal government making up for the cuts to state and local governments. However, with the impending sequestration looking more likely to happen and the payroll tax cut expired, more austerity is on the way.

However, some, including Bank of America’s Michelle Meyer, are still very optimistic about growth and think that the GDP number was actually good, given the defense cuts and reduced farm inventories due to drought.

Business Insider‘s Joe Weisenthal was even more upbeat, noting that the “bad” number is largely the result of war drawdown, while consumers and business continued to spend.

“So, less war, more business investment. This was a good report.”

Photo credit: “ma neeks” via 


Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

Dr. Mehmet Oz and Sean Hannity

Youtube Screenshot

Fox News prime-time host Sean Hannity is priming his audience to see election fraud in any defeat for Dr. Mehmet Oz, his favored candidate who currently leads the GOP primary for U.S. Senate in Pennsylvania with two percent of votes outstanding. If the fast-closing hedge funder Dave McCormick takes the lead and the Oz camp claims the election has been stolen, it could set up a potentially explosive proxy war with Hannity’s colleague Laura Ingraham, whose Fox program favors McCormick and has suggested he is likely to prevail when all the votes are counted.

The GOP primary was a chaotic slugfest that split Fox’s slate of pro-GOP hosts in an unusually public way. Hannity was Oz’s most prominent supporter, reportedly securing the support of former President Donald Trump and using his program to endorse the TV personality, give him a regular platform, and target the challenge from right-wing commentator and Fox & Friends regular Kathy Barnette. Ingraham, meanwhile, used her Fox program (which airs in the hour following Hannity’s) to promote McCormick, criticize Oz, and defend Barnette.

Keep reading... Show less
Youtube Screenshot

Overturning Roe v. Wade is very unpopular, yet another poll confirms. Nearly two out of three people, or 64 percent, told the NPR/PBS Newshour/Marist poll that Roe should not be overturned, including 62 percent of independents. The poll also includes some good news for Democrats.

According to the poll, the prospect of the Supreme Court striking down Roe in the most extreme way is motivating Democratic voters more than Republicans: Sixty-six percent of Democrats say it makes them more likely to vote in November compared with 40 percent of Republicans. That echoes a recent NBC poll finding a larger rise in enthusiasm about voting among Democrats than Republicans.

Keep reading... Show less
{{ }}