By Fareed Zakaria
The GDP growth numbers are out, and they confirm the point that I have been making recently – that the U.S. is the cleanest dirty shirt in the pile. Yes, we have our problems, but if you compare us to Europe or Japan then the latest numbers suggest we are actually starting to get some decent growth.
“Gross domestic product expanded at a 2 percent annual rate, the Commerce Department said on Friday, accelerating from the second quarter's 1.3 percent pace. A pace in excess of 2.5 percent is needed over several quarters to make substantial headway cutting the jobless rate.”
Of course, the big short term challenge we face is the so-called fiscal cliff – the massive tax hikes and spending cuts scheduled to come into force in January that would be a huge blow to the slowly recovering U.S. economy. Yet even now, if Congress were to act decisively and make clear that no matter what the fiscal cliff could be averted, it would probably provide a significant boost to the economy. After all, companies are naturally worried about sharp cuts in government spending that would force those providing goods and services to cut back.
Congress could very easily lift this shadow, and it is in both parties’ interests to do so – both will get blamed if the U.S. is plunged back into recession. But there doesn’t seem likely to be any progress on this before the election.