We got the third revision of Q3 GDP numbers today and the news is good. What was initially reported as growth at a 2 percent annual rate and then revised up to a 2.7 percent annual rate now stands at a very respectable 3.1 percent annual rate. In nominal terms, we now have Q3 clocking in at 5.9 percent growth which is the kind of thing that's consistent with catchup.
The fly in the ointment is that Gross Domestic Income registered much worse at 1.4 percent growth. GDI and GDP are two different procedures for trying to measure the same underlying thing, so in principle you ought to always get the same number. In practice they often diverge because measuring the whole economy is difficult. But that's a pretty big divergence.
As a DC guy, I can't help but think that the election returns should serve as a tie-breaker here. It turns out that Barack Obama got reelected pretty comfortably. Not a crazy landslide, but a four percentage point margin that saw him carry every single state he could plausibly carry. Now it could be that's all because the Obama campaign's get out the vote operation was so amazing or Romney's 47 percent gaffe was so damaging, but it's also exactly the kind of outcome we'd expect from an incumbent presiding over 3.1 percent growth. At the time the election was happening, the official data thought we were doing quite a bit worse than that. But if we were actually doing better, people would see that reflected in their lives and their communities and those of their friends and family around the country.