White House: We’re OK with Slower GDP Report, ‘Underlying Economy Is Solid as Ever’

On Thursday’s broadcast of the Fox Business Network’s “Cavuto: Coast to Coast,” White House Council of Economic Advisers Chair Jared Bernstein stated that the White House is okay with the latest GDP report, “especially once you get under the hood, you take out some of those more volatile components, consumer spending and investment look great.” And “the underlying economy is solid as ever.”

Guest host Edward Lawrence asked, “When you dig into this GDP report…you find that the first quarter personal consumption grew at 2.5%, the non-defense government spending grew at 0.3%, but if you look back to the fourth quarter, non-defense government spending grew at 4.8%. So, government spending, was that driving the GDP? Is there a correlation there?”

Bernstein answered, “It’s certainly in the mix, it’s one of the components, but it gets a weight that’s much lower than consumer spending. Consumer spending is 70% of nominal GDP, add investment, and you’re north of 80%. Now, if you look at this first-quarter result, consumer spending, real and investment together grew at a 3% annualized rate. And that’s almost — think of that as almost a core GDP measure, something that takes out the more volatile inventories or net exports or even the government accounts, which can bounce up and down. And that’s why we think the underlying growth remains steady, solid, strong, just like you heard from Esther George a second ago.”

Lawrence then asked, “So, you’re okay with this GDP report?”

Bernstein responded, “Yeah, I think this GDP report, especially once you get under the hood, you take out some of those more volatile components, consumer spending and investment look great. In fact, year-over-year GDP is up 3%. That’s a great number. And look, since the president got here, the average GDP growth rate has been about 3%. His — GDP over his term has been the highest we’ve seen under a presidential term for 25 years in a row. Add in the very strong job market…and I think you understand, the underlying economy is solid as ever.”

Bernstein added, “Let’s not over-index on one quarter.” And “as you grow at a breakneck pace out of the pandemic-induced recession, we have to settle back into more steady, stable growth, and I think that’s one of the things you’re seeing in reports like the one this morning.”

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