May 26, 2005

Shameless Brag about GDP Prediction; Shameless Reference to Prior Post; Predictable MSM Downplay of Good News

Filed under: Economy,MSM Biz/Other Bias — Tom @ 8:16 pm

As predicted by Kudlow and BizzyBlog (not necessarily in that order), first-quarter GDP growth was revised upward from 3.1% to 3.5%.

I used the original reaction to the preliminary GDP growth release as a reason to explain the origins of MSM business bias.

Also as expected, the MSM business press came up reasons to be disappointed with the revision:

NEW YORK (CNN/Money) – The U.S. economy grew at a faster pace in the first quarter than earlier estimates, the government reported Thursday, but the stronger reading fell a bit short of Wall Street expectations.

The gross domestic product, the broad measure of the nation’s economic activity, rose at an annual 3.5 percent rate in the first quarter, compared to the 3.1 percent gain reported in an earlier report. Economists surveyed by had a consensus forecast that the GDP would be revised up to 3.6 percent growth, while Reuters found a range of estimates from 3.2 to 4.0 percent growth.

A smaller-than-expected trade gap in March was one of the major reasons for the upward revision in GDP. Purchases of imported goods and services reduce the GDP, while exports, which grew to record levels in March, increase the measure of the nation’s economic activity.

Even with the upward revision, the first-quarter growth was slower than the 3.8 percent gain reported in the fourth quarter. Still, despite disappointing some on Wall Street, the report was a solid one, said John Silvia, chief economist with Wachovia Securities. In fact he said he expects future quarters this year to show even more slowing of the economy.

“I think the slowdown is still in the cards,” he said. “We’re probably looking at 3.5 to 3.25 (percent growth) in the second quarter, and 3.0 to 3.25 (percent) in the second half. Part of what drove the first quarter number was an increase in inventories, and a lot of that was unintentional. You’ve already seen businesses starting to scale back production to reduce that inventory.

“I don’t see a reacceleration of this economy at all, unless there is an external factor,” he said.

All that gloom over one-tenth of 1% (3.5% actual vs. 3.6% predicted). Zheesh.

As to “external factors” potentially contributing to “reacceleration” (as if going from 3.8% to 3.5% is a big slowdown)–how about these just for starters:
- Oil prices trending down.
- Airport traffic at its highest level in 5 years (but reported instead as looming problems with flight delays, cancellations, and security bottlenecks).
- Mortgage rates staying low, and even falling..

UPDATE: 20 minutes after my post, Kudlow chimes in and exhaustively builds on the good numbers, predicting “non-inflationary prosperity for years to come.” Whew–He is a braver man than I on that one. It looks like he left the gloating to me. Fair enough.

Links of the Day (052605)

One of the worries I had originally was whether there would be enough business-related items to blog about on any given day. Today, as usual, not to worry:

  • Buy one, buy two, bank red, buy blue: Some supporters of (take your pick) Democratic, progressive, liberal, and/or leftist candidates and organizations have decided to stop patronizing companies that give to (take your pick) Republican, reactionary, conservative and/or right-wing candidates and organizations. One such web site is Buy Blue.

    Staying true to blue companies, or even finding them in some cases, has proven difficult. Currently, Buy Blue is picking on the “progressive” purchasing program know as Working Assets because its affinity credit card program is with MBNA (scroll to bottom), which has been a very prominent GOP donor.

    Working Assets has definitely taken notice–you won’t find anything on their site about MBNA unless you read the fine print in the actual online credit application.

    There’s one problem, though: Any attempt to find an alternative bank forces you to face the fact that (surprise-not) almost all bankers give more money to the GOP than to Democrats. The one exception noted in the list at the bottom of this link is (relatively small) Providian Bank. And before you “progressives” move all your card business over there, note that Providian in 2001 was involved in the largest class action settlement at the time for consumer fraud.

    It’s not easy being blue.

  • Minor spyware violations: Instapundit stumbled across this despicable problem earlier this week with his daughter’s computer: mainstream companies involved with pumping adware and spyware onto computers from web sites for kids. This is one more bit of proof that John Dvorak’s proposed law should be passed:

    “Any person who knowingly writes or reads files from another person’s computer by personal or robotic means for whatever reason whatsoever and without the permission of the party involved, with full knowledge of the activity each and every time the action is performed, is guilty of a felony and subject to fine and imprisonment not to exceed $10,000 and one year in prison for each offense.”

    That, or get a Mac, and hope that Apple’s market share stays low.

  • Two consequences of the San Francisco-San Jose area’s sky-high home prices: unprecedented risky borrowing (“Roughly two-thirds of the home mortgages in the San Francisco Bay area are interest-only mortgages.”) and families with children fleeing.