October Surprise? U.S. Economic Growth May Accelerate Just Before Election Day
Some forecasters see U.S. GDP growth on track for a 3% pace in the third quarter, to be announced in a late-October report
An October surprise could be coming in the form of an explosive rebound for economic growth. The Commerce Department will release its initial estimate for third-quarter GDP on Oct. 28, just days before the presidential election. PHOTO: JOSHUA LOTT/GETTY
By BEN LEUBSDORF
Less than two weeks before Election Day, American voters could learn that economic growth has suddenly accelerated to its fastest pace in two years.
It’s not a trick or conspiracy, simply the product of the government’s regular schedule for releasing economic statistics. The Commerce Department’s first estimate of gross domestic product for the third quarter has long been scheduled to come out on Oct. 28, 11 days before the Nov. 8 presidential election. Many economists are predicting the report will show a pickup in growth after three straight quarters of lackluster expansion, fueled by decent-if-not-great consumer spending and the end of a five-quarter drag from lackluster business inventories.
A lot can (and probably will) change between now and late October. But as of Friday, forecasting firm Macroeconomic Advisersprojected a 3.1% seasonally adjusted annual growth rate for GDP in the third quarter. The Federal Reserve Bank of Atlanta’s GDPNow model on Thursday predicted a 3% growth rate. Oxford Economicson Friday also estimated the third quarter’s growth rate at 3%.
Some forecasters are more cautious – economists at Barclays on Friday predicted third-quarter growth at a more modest 2.6% pace. And surprises are common; economists similarly predicted a pickup in GDP growth during the second quarter, but it failed to materialize.
Still, if the pace of GDP growth exceeds 2.6% for the current quarter, it would be the strongest growth rate since the 5% pace seen in the third quarter of 2014. That won’t decide the election either way, but good news could benefit Democratic nominee Hillary Clinton, who has positioned herself as the political heir to President Barack Obama and his stewardship of the economy. Similar good news came last week when the government reported that U.S. household incomes surged in 2015 while the poverty rate declined.
Partisans, in the heat of a campaign, might question whether data are being manipulated to benefit the other side. One of Republican nominee Donald Trump’s sons in July said jobs data are “massaged to make the existing economy look good and make the administration look good when in fact it’s a total disaster.” In October 2012, former General Electric CEO Jack Welch called a positive jobs report “unbelievable” and accused “Chicago guys” of manipulating data to benefit Mr. Obama.
In fact, the federal government’s statistical agencies – including theCensus Bureau, the Bureau of Economic Analysis and the Bureau of Labor Statistics – are careful to stay away from politics. Economic indicators are compiled by civil servants and released on a regular, preannounced schedule. Departments “must seek to avoid even the appearance that agency design, collection, processing, editing, compilation, storage, analysis, release and dissemination processes may be manipulated,” according to the U.S. government’s Statistical Policy Directive No. 1. Federal Reserve ChairwomanJanet Yellen last year said that “the public’s expectation and insistence that information provided by the government can be trusted” has become a “fundamental feature of our democracy.”
Is there any manipulation of data to benefit the party in power? “Absolutely not,” said Steve Murdock, a Rice University sociologist who served as Census Bureau director under President George W. Bush during the 2008 election. Officials, he said, take seriously their responsibility to protect respondent confidentiality, properly process data and keep reports secure until they are formally released to the public.
The American people, Mr. Murdock said, “can absolutely trust it.”