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GDP Gap Stuck at 6%

Pro Growth Liberal points us to this interpretation of new economic data:

GDP Gap Stuck at 6%

Dean Baker gets it right with respect to the latest news on GDP:

A sharp drop in government spending, heavily concentrated in defense, coupled with a decline in inventories caused GDP to shrink at a 0.1 percent rate in the 4th quarter. Government spending fell at a 6.6 percent annual rate, driven by a 22.2 percent decline in defense spending, subtracting 1.33 percentage points from the growth rate in the quarter. A 40.3 drop in the rate of inventory accumulation reduced growth by another 1.27 percentage points. Without these factors, GDP would have grown at a 2.5 percent annual rate in the quarter. Pulling out these extraordinary factors, the GDP data were largely in line with prior quarters.

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Joe Scarborough on the Deficit

Pro Growth Liberal at Econospeak also takes Joe Scarborough to task on Krugman and Keynes:

Joe Scarborough on the Deficit

After his interview with Paul Krugman this morning Joe Scarborough wrote:

Mr. Krugman’s view is that Americans would be better off if its government ran deeper deficits and ignored its longterm debt.
To suggest that Keynesians like Paul Krugman ignore the long-term government budget constraint is either dishonest or shows that Mr. Scarborough does not understand what we are saying. Which is why Mr. Scarborough should check out this list of commentary on the current economics and fiscal situation compiled by Joe Weisenthal.

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