Slow Growth: Chicken or Egg?

Today's Commerce Department report shows the economy is growing at an annual rate of 1.3%. That is not enough to keep up with population growth.

The New York Times explains: "The economy’s slow growth rate is partly responsible for stubbornly high joblessness across the country. As of June, 14 million Americans were actively looking for work, and the average duration of unemployment has been reaching record highs month after month. Businesses are sitting on a lot of cash, but are still reluctant to hire because there is so much uncertainty about the future of the economy."

The Times has it backwards. The stubbornly high joblessness is causing the economy's slow growth rate. But cheer up, things could be worse. And if deficit hawks in Congress get their way and reduce government spending in the midst of joblessness, they will be.