It's pretty bad. It's a rate that normally means unemployment will rise if labor force participation holds constant, as it has the last three years. I have been saying to anyone that will listen here in St. Cloud that housing was in trouble. (I notice I said two years ago that housing then was "on its last leg of a good run" -- damn! I should frame that one -- but a stopped clock is right twice a day.) The third quarter performance nationwide shaved 1.1% from the GDP estimate. And that's likely to continue into 2007. So yeah, housing is in pain.

But most of this was made up by good figures in consumption and business fixed investment. The other part of this GDP figure that should stand out at you is that inventories fell. That's right -- the run-up in consumption in the last quarter was not met by a concomitant increase in inventories. True, it was a small decrease, but nonetheless it indicates that firms generally are not holding on to more stocks than they planned on.

Indeed, I usually pay as much attention to final sales figures as the headline GDP, and final sales to domestic purchasers actually rose in the third quarter, as real dispoable personal income rose 3.7%. The money being spent is money from wages and salaries has kept final sales of domestic product at 3.5% year-over-year for the last two quarters. And durable goods production and orders are still moving smartly. And consumer confidence is rising.

So yes, it's pretty bad, and it might be bad news for the Republicans nationally. But I don't think it's nearly as bad as some people are going to make it out to be.