Why the economy is merely shuffling along

Consumer spending isn't as strong as it could be and austerity is the watchword in many parts of the world, but the fuller explanation centers on a sharp drop in the percentage of government spending (largely the work of Congressional Republicans) and a disappointing amount of business investment (companies are hoarding cash in the name of short-term profits that shareholders like). It's like a heat wave that easing but not fully broken. Compare the second-quarter of 1982, when the economy grew at an annual rate of 5 percent with the second quarter of this year, when GDP was only 1.7 percent (subject to revisions in the next few weeks). From the Washington Post's Neil Irwin:

The numbers may be objectively quite unimpressive, but after four years of seeing data almost exactly like this, we can only approach this report with a bit of resignation. The economy is doing about what we thought it was doing -- maybe a little better, maybe a little worse. But 1.7 percent growth isn't good in the environment we're in, even if it is a little better than economists thought the number would be. It isn't even mediocre. It's terrible. It's a sign of the diminished economic expectations that economy-watchers have set for themselves that it's anything to crow about at all.

Business Insider's Henry Blodget is especially tough on corporations:

One of the big reasons the U.S. economy sucks is that, after three decades of ever-more obsessive focus on "shareholder value," our corporations and their owners have become myopic and greedy. Instead of investing in the future, and sharing more of their vast wealth with the people who generate it (their employees), they are hoarding their cash and maximizing their short-term profitability. This business philosophy might--might--prop up their stock prices for the near-term. But it's also gutting the middle class and crippling the overall economy. And, in the process, ironically, it is constraining revenue growth for the same corporations that are trying to scrimp and save their way to maximized profitability.

Along with the second-quarter GDP, the government has done one of its periodic revisions on economic growth going back to 1929. The adjustments show that the Great Recession wasn't as bad and the recovery isn't as weak as originally believed. Not that you'd really notice. From the NYT:

The Great Recession (which lasted from the fourth quarter of 2007 to the second quarter of 2009) also looks less formidable, at least in output terms. In the latest measures, inflation-adjusted growth decreased at an annual rate of 2.9 percent during that time, instead of the previously reported 3.2 percent. And the cumulative peak-to-trough contraction in the economy was 4.3 percent, rather than 4.7 percent. Likewise the recovery has looked slightly less lackluster than originally estimated. From the second quarter of 2009 to the first quarter of 2013, gross domestic product increased at a 2.2 percent annual rate; in the previously published estimates, it increased 2.1 percent.