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October 30, 2003
Bad News for Democrats

The headline in today's Washington Post: Economy Grows at 7.2 Percent Rate in Third Quarter:

The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence. The increase in gross domestic product, the broadest measure of the economy's performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department reported Thursday.

The 7.2 percent pace marked the best showing since the first quarter of 1984. It exceeded analysts' forecasts for a 6 percent growth rate for third-quarter GDP, which measures the value of all goods and services produced within the United States.

Could it be that the tax cuts, designed to put more cash into the hands of middle-class consumers, may be working as intended?

Near rock-bottom short-term interest rates, along with President Bush's third round of tax cuts, have helped the economy shift into a higher gear during the summer, economists say.

Next quarter, economists are predicting 4% growth, a very good number, and job growth should start appearing next quarter or the quarter after. Barring any devastating terror attacks, Bush should be riding a solid economic expansion -- one that isn't relying on a stock-market bubble -- into next year's elections. The sackcloth-and-ashes contingent on the other side of the aisle will have their legs cut out from underneath them unless they can adjust their message. Look for a renewed focus on the budget deficit, and a renewed effort by the Bush administration to force cuts to counter it, as this is one area where they are justly vulnerable to attack.

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Posted by Ed Morrissey at October 30, 2003 7:57 AM

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