December 5, 2007

New Data Refute Old Media’s Ongoing Recession Obsession

Four reports today threw more cold water on Old Media’s “The Recession Is Coming, The Recession Is Coming” chorus.

First, the Bureau of Labor Statistics (BLS) issued its revised Productivity and Costs Report for the third quarter, saying:

The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised productivity data–as measured by output per hour of all persons–for the third quarter of 2007. The seasonally adjusted annual rates of productivity growth in the third quarter were:

6.7 percent in the business sector and
6.3 percent in the nonfarm business sector.

In both sectors, changes in productivity are higher than the preliminary estimates published November 7, and represent the largest productivity gains since the third quarter of 2003.

Refuting Old Media’s recent claims that the third quarter was fine, but that all good news is old news, the Institute for Supply Management’s (ISM’s) Non-Manufacturing report for November came in with an “expansion” reading of 54.1% (any reading above 50% indicates expansion). Though the reading is lower than last month’s 55.8%, and lower than expectations that it would come in at 54.8%, it’s still comfortably in expansion mode, and for the 56th straight month.

Here’s something you won’t see reported about the ISM’s numbers: They’re almost as good as those seen in the third quarter, when GDP grew by 4.9% (pending final adjustment in December). Looking at both the ISM Manufacturing and Non-Manufacturing indices, here is how the third quarter and fourth quarter so far compare, with Manufacturing and Non-Manufacturing weighted 15% and 85%, respectively, to approximate their contributions to the economy:


Third, new orders jumped by 0.5%, “unexpectedly” beating predictions of flatness.

Fourth, though its reliability is in my opinion more than a little suspect, ADP’s National Employment Report came in with an estimate of 189,000 new non-farm private-sector jobs during November, and an upward revision of October’s number.

With reported results like these, a recession would appear to be quite distant — which of course explains why Google News search shortly before noon on December 5 on the word “recession” (limited to Dec. 4 and 5 for news sources in the US) returns 15,350 results (/sarcasm).

Cross-posted at



  1. I hate to speak in such a way as to earn the title “conspiracy theorist” but….productivity jumps an amazing 6% and we add almost 200,000 jobs? And the growth in GDP includes growth in the real estate sector?

    The financial sector is awash with terror at this point; a run on a fund in Florida was halted by restriction on withdrawals – school districts are complaining they can’t get to their money; in the UK, banks are being asked not to borrow; downgrades on debt here are moving not one grade, but as many as 12;

    You know my position re: nationwide recession, but there is no way that everything is fine and all the bad news is just talking the economy down. There are serious problems and the numbers being reported sound more like they are coming from the CIA than they are from bean counters.

    Comment by Tracy Coyle — December 5, 2007 @ 1:18 pm

  2. #1, even if you think the govt. numbers are bunk, the ISM numbers shouldn’t be, unless you’re going to extend a conspiracy theory really, really far.

    I think what’s happening is that financial and lending firms are eating big write-offs of asset values that (crossing fingers) don’t really affect cash flow that much.

    Links to what you’re referring to re access to funds would be very welcome.

    Take care.

    Comment by TBlumer — December 5, 2007 @ 9:44 pm

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