In a surprise to most economists, the economy shrank at a 0.1-percent annual rate in the fourth quarter of 2012, despite a rise in consumer spending and average income.
While the news should not cause any panic about another recession, it is nonetheless discouraging to see the economy shrink slightly for the first time since the end of the recession in 2009, especially for students about to graduate and enter the workforce.
We can’t say it’s surprising, though. Each time it seems we, as a nation, are about to move forward and make some significant economic progress, we run into some tough headwinds that leave the economy virtually stagnant and millions of unemployed and underemployed Americans frustrated.
As usual, it appears as if the headwinds are coming out of Washington, where the threat of a fiscal cliff dive and upcoming, automatic cuts to defense and various spending programs left business feeling uneasy about the stability of the economic recovery.
That’s what’s so frustrating about all this. While recovering from the deepest recession since the Great Depression takes more time than a typical recession takes, we should be doing better than this. And we would be if it was not for the unparalleled dysfunction that has become synonymous with Washington.
We’re not even asking Congress to work on a deal to boost the economic recovery anymore. That’s out of the question, though it would be nice. All lawmakers need to do at this point is stay out of the way and stop threatening the economy with manufactured crisis after manufactured crisis.
Employers want to be able to hire more people, and people want to be able to work 40 hours a week at a job that pays the bills. But the economy is going to continue to sputter if consumer confidence remains stagnant.
While workers and companies do care about how the economy is actually doing, confidence, or a lack thereof, helps drive it. At what needs to be done to change the current rut we’re in can be debated all day, by both parties.
But what these numbers prove is that the economy is still reeling. And this point, that’s unacceptable: for businesses trying to expand and workers still looking for work.