Economic growth worst in more than 3 years

From the AP via the Houston Chronicle:

Economic growth slowed to a crawl in the third quarter, advancing at a pace of just 1.6 percent, the worst in more than three years.

The latest snapshot of the economy, released by the Commerce Department today, showed that the slumping housing market figured prominently in the economy's dramatic loss of momentum. Investment in homebuilding was cut by the biggest amount since early 1991.

The reading on gross domestic product was weaker than the 2.1 percent pace many economists were forecasting.

"The housing bubble burst and that really knocked down growth," said Joel Naroff, president of Naroff Economic Advisors.

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Of course, it's not all about the housing bubble: the article goes on to mention a host of issues, including inflation, that are making the overall economy sluggish. And that's exactly what the economy has been since Bush became President, sluggish. They say that you can't really blame the President one way or another for economic performance, but Bush is a special case. He's had Congress completely in his pocket for five and a half years now--they generally take his lead on most issues, especially the economy. That is, Bush wields more power in this area than pretty much any of his predecessors. That's why it's safe to say that this is all his fault.

And really none of this is surprising. Like I said, the US faces some pretty complicated economic problems, but Bush has gone after them with single-minded simplicity: cut taxes for the wealthy. I'll be the first to admit that some tax cuts can provide some stimulus for some parts of the economy. That is, tax policy needs to be in terms of incentives, wisely targeting cuts like a surgeon cutting out a tumor. Bush, on the other hand, lives in right-wing fantasy land, where handing over big sacks of money to the already wealthy somehow results in good times for all. Obviously, things don't work that way in the real world. Tax cuts are not a miracle cure for the economy. We need to be doing much more.

So, expect this kind of sluggishness to continue. I think that White House economic policy probably is capable of getting some short term growth going by its gratuitous use of smoke and mirrors, which is what's been happening since 2001, but it always falls short, and any gains made are always erased. What we need is some serious economic policy, that takes into account the fact that economics is complicated business. Sadly, the last word anyone would ever use to describe President Bush is "complicated."

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