The fourth quarter 2012 GDP growth rate was revised last week from -0.5% to +0.1% (of course it was, says the cynic in me), because trade contributed more to our GDP than had been originally estimated.

But in the opening paragraph, the WSJ‘s authors demonstrate a fundamental misunderstanding of what GDP growth is:

…the meager showing underscored that government spending cuts are slowing the recovery’s momentum.

They pursue this misunderstanding (I’ll ignore their euphemistic “momentum”) by citing carefully unnamed economists.  Noting that the fourth quarter performance includes “federal government outlays that fell at a 14.8% annualized rate,” they say that their anonymous economists

say restrained federal spending will continue to be a drag on GDP growth during the first half of 2013.

No.  GDP is the production of goods and services in an economy, it is not the spending of government in that economy.  Government spending impacts the reported GDP figure tautologically: it’s a line item in the GDP calculation.  Growth in production, though, can come only from the private sector, the private economy, in which our businesses and our citizens operate.  It is here that those goods and services are produced; work for those businesses on that production occurs; and spending or saving the sales revenue and the wages of the labor occurs.

Growth cannot come from government, including government spending.  Government spending, instead, comes at the direct expense of private production and spending.  Government has no money of its own, it can only spend money that it takes from the private sector today in the form of taxes, or tomorrow in the form of taxes to repay today’s borrowing.

Thus, the failure of the present “recovery” is caused by government spending, as the last four plus years have demonstrated empirically (along with FDR’s profligate spending, which contributed to prolonging the Great Depression), not from a reduction in government spending.  For instance,

Real final sales—GDP less changes in private inventories—increased 1.7% in the fourth quarter.

That’s still appallingly weak, but it’s much faster than the overall GDP growth, demonstrating that government spending isn’t necessary for the private sector—the real economy—to grow.