Don't Call it a Comeback

I love the smell of capitalism in the morning. Especially after reading that US gross domestic product grew at a 7.2% annual rate for the 3rd Quarter of this year. The July through September period was the strongest advance in GDP since the first quarter of 1984 and more than double Q2's 3.3% rate.

Perhaps more important was the announcement that consumer spending rose 6.6%, the biggest increase since early 1988. Spending on big-ticket items was up 29.9% and consumer spending on nondurable goods was up 7.6%. That was the best performance since Q1 of 1976. Add to all of this the news from the Labor Department that unemployment claims dropped once again last week.

That is not to say that the economy is out of the woods yet. Inventory reduction trends show that businesses are still concerned about a slide. What is promising, however, are increasing signs that the buyers strike by business sector is coming to an end. In Q3 there was a 15.4% growth in spending by businesses on equipment and software, up from 8.3% in Q2. That was the biggest increase since Q1 of 2000.

All of this of course means bad things for the Democratic presidential candidates. Their "Bad for You is Good for Us" campaign strategy might be hitting a snag. Bad things have to continue to happen for one of them to win, and only a masochist would favor that kind of attitude. As I have noted in the past, good news is bad news for anyone trying to oust an incumbent.