I’ve been feeling reasonably good about the economy. A big part of this is just theoretical. The government — partly because of the Democrats, but mostly because of the Republicans — has done an enormous amount of harm to the economy. But that’s now baked into the economic cake. It would seem that the economy ought to be improving simply because the government isn’t actively harming it through spending cuts. And on the empirical side, the last few jobs reports have looked pretty good. But on Friday, the Department of Commerce (pdf) put out its estimate of GDP growth in the fourth quarter of last year. And the news ain’t good.

The growth rate for the year was 2.5% with the annualized fourth quarter growth rate of 2.6%. To give you some idea of just how unimpressive this is, during the recovery after the far smaller dot-com recession, we got a growth rate of roughly 3.5%. And you may remember: that was an anemic recovery. Earlier, more robust recoveries saw far higher GDP growth. But those were in the days when he didn’t live under an oligarchy. (But note: poor economic growth hurts the poor and rich; the rich really are short sighted.)

Dean Baker — the Pollyanna of economists — noted something to make even these poor headline numbers worse. In the first quarter of last year, due in part to the bad weather, the economy actually shrank by 0.52% (2.1% annualized). That means that the economy had some catching up to do. And so the growth during the following three quarters should have been really strong. And indeed, the second and third quarter growth rates were good: 4.6% and 5.0% annualized rates. That makes the 2.6% rate for the last quarter all the more troubling. We’ll have to see what happens next quarter. But this really has been the “next quarter” recovery: it has constantly been crummy but hopeful. As Herbert Hoover never actually said, “Prosperity is just around the corner!” Or, as Annie said, “The sun ‘ll come out tomorrow!” Or as the actual Pollyanna said, “There is something about everything that you can be glad about, if you keep hunting long enough to find it.”

But if you want to think the last quarter growth rate was only bad through a combination of bad weather and a very strong third quarter rate, feel free. But Dean Baker had even more bad news. It turns out that of the one-third of the GDP growth rate in the last quarter is due to increases in inventory, “This will be a drag on growth in future quarters since inventories will almost certainly not continue to accumulate at the same pace, which was extraordinarily rapid.” In other words, much of the growth is effectively siphoning off growth that would have happened later.

Let us not be too down in the dumps about this, however. There are are things we have to keep in mind. First, of course, this is just one quarter. Maybe everything will be back up in the first quarter of this year. Second, poor economic growth should lessen some of the pressure on the Fed to raise interest rates. In this regard, I don’t know why the Fed is so keen to act anyway, with inflation and the employment to population so low. Time will tell. “Tomorrow! Tomorrow! I love ya, tomorrow! You’re always a day away!”