US GDP, The Recovery, And Jobs -- July 30, 2016

Three interesting articles and graphics in today's WSJ.

First, US GDP grew a disappointing 1.2% in second quarter. Economic growth ws well below expectations; cautious business investment offset robust consumer spending. Economic growth is now tracking at a 1% rate in 2016—the weakest start to a year since 2011—when combined with a downwardly revised reading for the first quarter. That makes for an annual average rate of 2.1% growth since the end of the recession, the weakest pace of any expansion since at least 1949.

Second, an op-ed, make America grow again. The economy is stuck on 1% growth as business investment stalls.

And, finally, the third article, over at "Heard on the Street," that ties everything together -- lack of business investment and "stellar" job reports over past several months: the divide between GDP and jobs.

Even so, the message from the GDP report is that the economy is growing only slowly—a message greatly at odds with labor market readings. In the first six months of this year, the economy gained over one million jobs. If the historical association between GDP and employment growth from before the financial crisis held, about 400,000 fewer jobs would have been added.

One explanation for why GDP figures and labor-market data seem at odds may be that economy’s productivity problem is even worse than believed. Under this view, years of weak investment spending have cut into companies’ efficiency gains, so that even slight increases in demand compel them to hire. With much of the labor markets’ slack already taken in, they must pay up more to get the workers they need.

Or the GDP-labor divide may be driven by a situation where the U.S. economy is experiencing decent domestic demand in a world that is very weak. Manufacturers making globally traded goods see little reason to invest, while American oil producers, facing low prices that have little to do with what’s happening domestically, are retrenching. That cuts into GDP growth, but since these industries represent only a small portion of employment, the effect on job growth is muted.

Either scenario suggests that weak GDP and steady job growth could persist through the rest of the year.

Of course, nothing is mentioned about a) the anti-business mentality in the West Wing; b) the EPA; c) ObamaCare; d) the thousands of regulations promulgated by this administration.

The editorial -- the second linked article -- did mention some of these.