Gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, a significant spike from a relatively shrunken base. The economy had contracted at annual rates of 0.7 percent and 6.4 percent in the first and second quarters of this year, respectively.

The new numbers from the Commerce Department are likely to provide cold comfort for out-of-work Americans  — the national unemployment rate hit 9.8 percent in September, job growth historically trails other economic indicators, and GDP presents a very broad snapshot of the economy — but they could suggest a recovery is on the way.

“I think he had buyer’s remorse,” one GOP senator told me.  “After he looked into it more, he said, ‘Whoa, this was a mistake.’”

“He’s been getting Republicans walking up to him saying, ‘Are you going to let the White House circumvent you, are you going to let them do this to you?’” one GOP aide who is aware of those conversations told me Thursday night.  “This was a natural conflict that was going to arise, and on a personal level, politics aside, people were saying ‘Hey, are you sure you want to do this?’”

York concludes that “the Census issue is likely to intensify” post-Gregg, which is a leap of faith: the White House was only considering shaking up the Census after the Congressional Black Caucus (and other Democrats) balked at the idea of Republican Gregg, who’d opposed statistical “sampling” reforms (which could count more minorities), running the show.

Right now Republicans can do what they had been doing and put heat on the White House not to devolve the management of the Census to the White House. They can bring it up in hearings; they can introduce a bill that the Democrats will almost surely table. But their leverage is gone. Assuming the White House doesn’t choose another Republican to run Commerce — and given the way everyone not named “Robert Gates” or “Ray LaHood” has acted, that’s a strong possibility — the GOP has lost the chance to have a high-level advocate against Census sampling in the administration. If the next commerce secretary agrees with the White House and CBC on sampling, then there will be sampling, no matter what happens to the actual management of the Census.

Nevertheless, for a Republican Party desperately careening from message to message, from “Drill Baby Drill” to “The Future is Cao,” Gregg’s move has rallied the troops and provided them with a set of organizing principles around which to begin rebuilding their tattered brand—or at least to sully Obama’s sterling brand.

OK, I’ll ask: What organizing principles?

Before the Gregg withdrawal, Republicans were piling on the White House for trying to devolve some (not all) of the management of the Census from the Commerce Department to the White House. Is that the new Republican rallying cry? No, it’s another example of the party careening from message to message.

If 2010 rolls around and the GOP is running “Return full Census management responsibilities to the Department of Commerce!” ads in swing states, obviously, I’ll eat my words.

CQ’s Jonathan Allen points out that Gregg, one of the upper chamber’s most vocal fiscal hawks, voted twice in 1995 to abolish the department — once in the Budget Committee and once on the Senate floor. From CQ:

Gregg’s 1995 votes were cast for the fiscal 1996 budget resolution, a nonbinding blueprint that outlined the GOP’s fiscal priorities after Republicans won full control of Congress for the first time in 40 years.

The Senate version of the controversial measure envisioned spending cuts of more than $960 billion, almost half of it from Medicare and Medicaid. Democratic efforts to amend it were uniformly rebuked by a united GOP majority on the Budget Committee.

Ultimately, the Commerce Department survived, and Gregg has since shown more interest than most of his Republican colleagues in funding some of its agencies, particularly the National Oceanic and Atmospheric Administration.

Gregg also fought President Bill Clinton’s efforts to increase funding for the Commerce Department to administer the 2000 census. Indeed, Gregg’s commitment to basic functions of the department has been questioned at times.

“He was generally pretty harsh on them and not really interested in their programs, especially the commerce side of things,” said a Democratic appropriations aide.

A Republican staffer was even more blunt, telling CQ: “I guess if you can’t destroy it, go be in charge of it.”

It brings back memories of John Bolton, the United Nation’s critic who later became U.S. ambassador to the U.N. And it begs the question: At what point do we stop blaming Obama’s candidates (think: Tim Geithner; Tom Daschle; Larry Summers), and start questioning the judgment of the guy who wants them at his ear?

President-elect Barack Obama will nominate New Mexico Gov. Bill Richardson as Commerce secretary tomorrow at an 11:40 a.m. EST news conference in Chicago, according to a transition source.

Mystery solved.

Pritzker, a Chicago billionaire and hotel heiress, was a major contributor to Obama’s presidential campaign and ran his record-breaking fund-raising juggernaut. This alone would seem to be problematic for a president-elect who ran on a platform of change. From The Washington Post:

Commerce is not a high priority slot at the moment, but ever since the election, Obama advisers have worried about the “business as usual” appearances of giving Pritzker a job tinged by cronyism. Most Commerce secretaries in recent decades were major donors for the presidents they served, the type of old-style practice that Obama has pledged to purge.

But Pritzker allies also were confident that Pritzker herself would quickly depart from tradition by applying to Commerce the same exacting standards and bristling energy that made her the most successful finance chair in campaign history.

However, her position in the campaign would not be the only troublesome aspect of the pick.

The Chicago-Sun Times reported in April that Pritzker was a former chair of the board of Chicago’s Superior Bank, which failed in 2001 after making large amounts of sub-prime loans. While Pritzker stepped down as chairwoman in 1994, she remained on the board of the bank’s holding company.

[A] letter obtained by the Chicago Sun-Times shows that until the end, Pritzker appeared to be taking a leadership role in trying to revive the bank with an expanded push into subprime loans.

Pritzker wrote in May 2001 that her family was recapitalizing the bank, and she pledged to “once again restore Superior’s leadership position in subprime lending.” The bank shut down in July 2001.

According to The Sun-Times, the Obama campaign said Superior did not pursue the predatory sub-prime loans at the heart of the current financial crisis. But given the likely state of the economy when Obama takes office in January, having to explain away a cabinet nominee’s connection to the sub-prime debacle is not exactly the way Obama would like to begin his presidency.

Coupled with Pritzker’s prominence as a campaign fund-raiser, her appointment seems to have the potential to scuff the new administration’s shiny change facade.