First let me say that 2.5% growth in GDP is too slow. As the above figure indicates, trend real GDP growth from 1965 to 2007 was 3.103%. Wow, big celebrations when for one quarter GDP growth rises to 80% of the normal trend growth rate! Of course, everything is relative and the first quarter had growth of only 1/3rd the trend. As the figure shows, for the first time in a recovery, we are falling further and further below the trend. Yet, the Obama administration is crowing over what is responsible for this great news. From The Hill newspaper:
Two of President Obama’s top economic advisers are crediting increasing petroleum production with the rosier estimate for second quarter economic performance announced this week. . . .
The United States petroleum trade deficit hit a record low in June as booming domestic oil production displaced imports and exports of refined petroleum products increased.
That played a significant role in revising U.S. gross domestic product growth in the second quarter to 2.5, up from 1.7 percent, said Furman and Sperling. . . .
Ironically the day before the GDP numbers were released The Hill newspaper had this story:
Four senators – two from each party – say President Obama should not allow a State Department inspector general (IG) probe of the Keystone XL pipeline review process to further delay a final permit decision.
The IG recently said its review of the department's selection of a contractor analyzing the project would bleed into 2014, raising the prospect that a federal permit decision could await the outcome.
Sens. John Hoeven (R-N.D.), Mary Landrieu (D-La.), John Thune (R-S.D.) and Max Baucus (D-Mont.), all pipeline backers, together issued statements Thursday criticizing the potential for more delays in the five-year federal review.
“This tactic of delay and deferral must stop. It is depriving America of jobs, hurting the American economy and hurting the American people,” Hoeven said in one of the statements, which underscore efforts by pipeline backers to keep political pressure on the White House. . . .
“We cannot sit by while excuse after excuse delays jobs in Montana and across the country,” Baucus said. “We've had years of studies and the President's own State Department has repeatedly concluded the environment won't be harmed. It's past time to put Americans to work building the Keystone pipeline.” . . .
Is the Obama administration claiming credit for the growth from increased oil output just a little too ironic?
Labels: Economy, stimulus