GDP Gives Hope to Democrats But Not Many Others

The rebound in US gross domestic product in the third quarter comes as a welcome surprise for Democrats heading into midterm elections, potentially putting to rest the notion that the country is already in a recession. But for workers and investors, the report isn’t quite so reassuring.

Consider the impact on public perception. GDP, arguably the most publicized economic statistic in America, had contracted in the previous two quarters, bolstering the argument that the US was already in a downturn, based of course on a flimsy rule-of-thumb definition of recession as two consecutive quarters of declining real growth. This year has been a master class in why rules of thumb are so perilous because the weak first-half numbers were driven by volatile inventory and trade components and could yet be revised to look much more benign.