The new Commerce Department report is out today. There was some hope that it might reveal glimmers of growth, but instead, its numbers are all either stagnant or decaying. It’s a mausoleum for the American economy.
Economists had been lowering expectations in advance of the report, which led some to speculate they were trying to make a somewhat encouraging report look better. Instead, its numbers are worse than the reduced projections. 1.8% GDP growth was expected, and that would have been appalling… but it turns out we had only 1.3% growth in the second quarter. What’s more, first-quarter growth was revised downward to a microscopic 0.4%.
The media tries valiantly to spin this as a “slow recovery,” which is exactly like insisting that a dead Norwegian Blue parrot is really just “pining for the fjords.” The New York Times quotes an economist who cuts through the spin and uses the correct terminology:
“The word for this report is ‘shocking,’ ” said John Ryding, chief economist at RDQ Economics. “With slow growth, higher inflation, almost no consumer spending growth, it is very tough to find good news.”
The Times nevertheless tries to fit this into its increasingly deranged effort to portray the Obama Depression as an argument in favor of bigger government:
The latest figures come as Congress is debating how to put the nation on a more sustainable fiscal path, with measures that some economists worry could further slow the recovery and even throw the economy back into recession.
Like hell they’re “debating how to put the nation on a more sustainable fiscal path.” The Boehner deal reduces the deficit by less than 0.5% at best, even if all of its promises are kept over the next ten years. If the Democrats ever actually write down a real plan, the only certainty is that it would be worse. It’s time for people like the New York Times editors to take a long look at themselves in the mirror, and resolve to show some respect basic logic, even if journalistic integrity and the American spirit of liberty are forever beyond their grasp.
You might be wondering how the Democrats will try to squirm out from beneath this horrible economic news, even as they’re demanding blind trust from the electorate on the budget battle, and Obama campaigns for re-election. That weird little aside about “measures that some economists worry could further slow the recovery” in the Times piece is a clue. The new voters-are-stupid strategy bubbling out of the Democrat Party is to claim that the stagnant economy is a result of market jitters caused by Republican intransigence on the debt ceiling. That explains why GDP growth was almost zero in the first quarter of the year, months before the debt ceiling struggle began!
Consumer spending was flat in the second quarter, while manufactured goods fell 4.4%. An Associated Press report notes that these were factors in making the 2007-2009 recessionary period worse than previous recessions:
From the start of the recession at the end of 2007 to the end in June of 2009, the U.S. economy shrank 5.1 percent. That is 1 percentage point worse than the previous estimate that the recession reduced total output during that period by 4.1 percent.
Among the previous 10 postwar recessions, output in only two dropped by more 3 percent. In the 1957-58 recession, the economy contracted 3.7 percent. And during the 1973-1975 downturn, the economy fell 3.2 percent from the start of the recession to the end.
The government attributed the bigger declines in output in part to weaker consumer spending and business investment than previously estimated.
Does anyone really want to argue that investors don’t worry their pretty little heads about massive subsidies, bailouts, market-distorting programs like “Cash for Clunkers,” moratoriums on vital industries like oil drilling, bans on time-tested products such as light bulbs, a health-care disaster that spikes the cost of labor through the roof, industries such as ATM and corporate jet manufacture randomly demonized by a desperate President looking to score political points, and government agencies that actively seek to destroy law-abiding companies like Boeing on behalf of union bosses… but they’re scared to death of the possibility that government might grow a bit smaller?
As for flat consumer spending, there’s nothing surprising about that. Obama’s inflationary policies are making everything from gas to food more expensive. Everyone is legitimately worried about losing their jobs to the black hole of job destruction he has created. Of course they’re not spending a lot of money on consumer goods.
Put these life-support GDP numbers together with 16% real unemployment, and repeat after me: there is no “recovery.” Raising the debt ceiling without a reform on the order of the Cut, Cap, and Balance Act is tantamount to placing more faith in the people that gave us Third World GDP growth.