GDP falls 0.3% in third quarter

By Rick Moran

This is not good news for the economy, the country, or the candidacy of John McCain :

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 0.3 percent in the third quarter of 2008, (that is, from the second quarter to the third quarter), according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.8 percent.

The Bureau emphasized that the third-quarter "advance" estimates are based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The third- quarter "preliminary" estimates, based on more comprehensive data, will be released on November 25, 2008.

The decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were largely offset by positive contributions from federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

Not unexpected of course. Not when you have a credit crisis that virtually halts consumer spending for anything except essentials and a housing market where value is still tumbling.

Obviously, it couldn't have come at a worse time for McCain. Or could it? Since everyone expected the downturn, perhaps the American people have already factored it into their voting decision. But it will certainly affect any undecided voters - people that McCain needs desperately to close the gap with Obama before election day.

Some pundits are predicting it will kill any momentum McCain has been building up this past week. There might be something to that only it appears that McCain has overtaken Obama in perceptions on who best can deal with the economy. That perception shouldn't change with news that most everyone was expecting and the fact that people are approving of McCain's stance on the economy not for what has happened previously but because they wonder what Obama is going to do.

Where we go from here will depend on the next president. Let's hope he's someone who understands you don't raise taxes in a recession and who knows how damaging it would be to spread the wealth at a time of economic downturn.