The latest numbers from the Commerce Department show that GDP increased faster than we thought in the third quarter of 2014. Growth clocked in at 3.9 percent, an increase from the original estimate of 3.5 percent. “The economy expanded at its fastest pace in more than a decade,” says the Wall Street Journal. “The combined growth rate in the second and third quarters was 4.25%, the best six-month reading since 2003.”
This is true, but a bit misleading since both quarters were making up for a dismal first quarter in which GDP fell by 2.1 percent. Still, even if you look at things in a more defensible way, economic growth is unquestionably picking up. The chart on the right uses a 5-quarter moving average to smooth out individual quarters that might be unusually high or low, and the trajectory of the economy is clearly on the rise. You still can’t really say that things are booming, and it continues to be true that the labor market is loose and wages are pretty stagnant. Nonetheless, since 2011 growth has increased from about 1.8 percent annually to about 2.8 percent annually. Things are picking up.
If Europe can ever manage to get its act together, we might finally start really digging ourselves out of the Great Recession. I’m not sure I see any signs of that happening soon, though.