The Bureau of Economic Analysis released their initial forecast for gross domestic product in the third quarter, finding that the economy grew at just a 2.0% annualized rate. Worse, most of the growth came out of increased inventories, according to CEPR’s Dean Baker. If you take away the inventory surge, you have growth of only 0.6%.

Final demand growth has averaged just 1.0 percent in the five quarters since the recession officially ended in the 2nd quarter of 2009. This is noteworthy since it is unlikely that the rate of inventory accumulation will accelerate still further in future quarters. In fact, it is likely to slow to a more normal pace, especially if some of the accumulation in the third quarter was involuntary. This means that GDP growth in future quarters will more closely track final demand growth.

This is a pretty disastrous report. Ending the homebuyer tax credit sent residential investment plunging. While export growth increased, a surge in imports meant that the trade deficit reduced growth by almost 2% all by itself. The entire 0.6% in growth – actually a touch above that – can be attributed to government spending, particularly in the stimulus and various add-on packages. But this spending is mostly going away in future quarters.

We’re at the point where even Ben Bernanke wants more fiscal stimulus, but being a conservative Republican, he’s afraid to actually say so. And so his silence just helps along the country on a course of economic drift.

This is a total failure of elite policymakers. And it’s hard to have any optimism for the future.