Despite Recession (/sarc), 1st Quarter 2008 GDP Growth Revised Upward to 0.9%
Predictions:
- Reuters — +0.9%.
- Bloomberg — +0.9%.
Actual (link here; the release timing at the top is wrong, but it IS today’s release; 9:30 a.m. - they fixed it): +0.9%.
As I’ve said several times, this is nowhere near acceptable. But it sure as bleep isn’t a recession.
UPDATE: Initial AP reax from BizzyBlog fave Jeannine “Averse to Positive News” Aversa (bolds are mine) –
The economy plodded ahead at a 0.9 percent pace in the first quarter - slightly better than first estimated - but still underscoring caution on the part of consumers and businesses walloped by housing, credit and financial problems.
….. The figure didn’t meet a definition of recession, which under a rough rule is two straight quarters of shrinking GDP, and might raise hopes the country can dodge a full-blown downturn.
Uh, Jeannine, even if the figure had been NEGATIVE, it wouldn’t have met the definition of recession.
The existence of a “downturn” requires a negative number; yet Aversa writes of avoiding a “full-blown downturn,” as if a smaller one already exists. Will somebody please tell poor Jeannine that there hasn’t been ANY “downturn” yet?
UPDATE 2: Warren “by any commonsense definition, we are in a recession” Buffett (first item at this link) will just have to spin harder.
These items are also discussed at this NewsBusters.org post.
I get the argument that the press has an ideological axe to grind in regards to the economy. I just wonder though if part of the reporting isn’t colored by the terrible economic state of many MSM outlets. I mean if it sucks in my business and I face the threat of a job cut at any moment, it must suck for everyone else, right? . . . right?
Comment by TheDuke — May 29, 2008 @ 11:18 am
#1, I think that’s relevant, but not exculpatory.
Comment by TBlumer — May 29, 2008 @ 11:59 am
Shhhhhh…Don’t tell the folks over at MarketWatch…they think U.S. could have recession without drop in GDP…and besides, First-quarter GDP revised up to 0.9%, as expected!
BTW, both stories have the same byline.
Comment by Porkopolis — May 29, 2008 @ 1:21 pm
#3 Mario, Good old Rex.
BTW, I did get around to criticizing his fantasyland in this PJM column (BizzyBlog version). Thx for the initial tip.
His economists are predicting minus 0.4% for the second quarter. NABE is predicting +0.4%. Where does Rex find these people?
Comment by TBlumer — May 29, 2008 @ 2:08 pm
Q1 2001 GDP was still reported at +1.2% when the NBER declared March of that year as an economic peak; it was only revised down much later. Martin Feldstein was on Bloomberg television today talking about how the economic indicators they watch are virtually all pointing down (a point I’ve made quite clear elsewhere). In fairness, he did state it’s possible we might avoid recession (though he doesn’t seem to think it likely). The Chicago Fed National Activity Index is quite clearly in recession territory. Positive GDP by itself — particularly at +0.9% — hardly cries out for an unqualified “no recession” call. There’s simply too much anecdotal evidence pointing the other way.
Comment by Invictus — May 29, 2008 @ 7:41 pm
#5, I said that 0.9% isn’t recessionary. Even NBER, with all of its fluidity, wouldn’t consider it recessionary.
The NBER didn’t call a recession for the last half of 2000, even though 3rd quarter after all revisions ended up being negative. The only reason the downward revisions to GDP were so big over the next 5 quarters is that they didn’t pick up the impact of the gathering tech bubble and how the Internet companies that were built for the sole purpose of burning through cash didn’t have it to spend any more (either that, or they kept them high to help Gore get elected, but I don’t really believe that).
We don’t have an equivalent untrackable disruption this time (housing and loans are about as trackable as anything out there).
NBER says the recession didn’t start until March 2001, even though the whole quarter was negative.
NBER has never called a recession when, after all revisions, all GDP quarters were positive, as I believe the more recent two quarters and next quarter will be when they are re-re-revised to death 1-2 years from now (you certainly can’t tell me that they’ll go negative; we’ll just have to wait). If they indeed stay positive, NBER is not about to call a recession this time around, unless they want to be laughed out of the room and flush their credibility down the toilet.
As I noted before, the NBER hasn’t said how they’ll weight various “key” factors, and they haven’t even told us all of the factors they will look at, and they aren’t even sure what all of the factors are that they will look at.
It is a total waste of time to speculate about a recession, or worse, tell people there really is one (”don’t believe those silly numbers”), when growth is positive, the unemployment rate is going down or holding steady and is lower than 30 of the past 40 years’ annual averages, and real income is increasing (as reported today along with GDP, it increased more than expected). The Chicago Index you cite said that the data “possibly” point to a recession, not “clearly.” Meanwhile, ISM said last month that “the overall economy grew for the 78th consecutive month.” Not “possibly grew,” but “did grow.”
Anecdotal evidence? My anecdote-tellers tell me that commercial and industrial builders have tons and tons of work, and their volume is up by double digits.
There’s very little that the “we’re in a recession now, I just know it” crowd has to go on, except the hope that if they say we’re in a recession enough, we might eventually self-fulfill the prophecy.
I would suggest that you attempt your self-fulfillment somewhere else.
Comment by TBlumer — May 30, 2008 @ 12:24 am
Among the abundant anecdotal evidence that’s out there, there is also — from the GDP report — Final Sales to Domestic Purchasers (Table 1.4.1), or what’s happening ex trade and inventories. It printed at -0.1. Said Merrill Lynch’s David Rosenberg: “The key indicator of the strength of the domestic economy, final sales to domestic purchasers (GDP ex trade and inventories) remained in negative territory at -0.1% QoQ (was -0.4%). This is the first decline since 1991Q1 and is signaling a very fragile domestic economy.”
The importance of recognizing where the economy is is not so either you or I can do a dance in the end zone. It is so our “leaders” (for lack of a better word, since none of them seem to live up to it) can take appropriate action like, say, the recent stimulus package (which, regrettably, is going to fall far short of making a meaningful difference).
You want to think it’s all about Bush-bashing. It really isn’t. It’s about recognition of a problem so solutions can be formulated.
Comment by Invictus — May 30, 2008 @ 8:06 am
#7, you have got to be kidding —
The importance of recognizing where the economy is is not so either you or I can do a dance in the end zone.
All I need to do is visit your site for 30 seconds to know that it’s about Bush-bashing at the normal 8th-grade level.
Even Rex Nutting, who wrote about how you can have a recession with growth, appears to be climbing down from the recession-now “hysteria” (without admitting it). He actually quoted a guy who had a sober analysis, who says what I’ve been saying:
‘The U.S. economy is neither in the throes of a deep and painful contraction nor in the midst of a robust expansion. Instead, the U.S. economy is muddling along.’ — Richard Moody, chief economist for Mission Residential.
Comment by TBlumer — May 30, 2008 @ 8:45 am
Okay, Tom, you want me to stipulate that I think Bush is the worst president in the history of our country? Done. Can we now move on to actual economic data?
How does my opinion in any way change the voluminous data, that I’ve pointed to repeatedly, that shows an economy past its peak and in a state of decline? What answer is there for the CFNAI, an amalgam of 85 distinct data points, that is flagging recession? Employment has rolled over. The housing market decline shows few signs of letting up. Comsumer confidence is at 28 year lows. I could go on and on, but you get the point. Simply pointing to +0.9 GDP is not a rebuttal.
Now, you can banish me for my dislike of Bush, or you can actually present data — like I do at the website to which I contribute — that supports your claims.
Comment by Invictus — May 30, 2008 @ 11:20 am
#9, as long as NBER isn’t going to tell us how they’re going to do things, there’s no point in speculating how what they’ll do when the time comes. Again, if they attempt to declare recession when in the end no quarter comes in negative, with 5% uemployment, they’re fools, political tools, or both.
Again, CFNAI is self-admittedly flagging “possible” recession. Why should I consider that important? I don’t, and you know what? I’m allowed not to.
Again:
- Growth positive, quarterly per BEA and monthly per ISM.
- Unemployment rate down, and lower than the average of 30 of the past 40 years.
- Real incomes up — sluggish based on today’s report, but better during the time period CFNAI is labeling “possible” recession.
- Weighted average econ activity per ISM — expansion.
Finally, when you factor in how CA and MI are doing most of the sucking, it means that 48 states are for the most part doing a bit better than muddling through.
Perhaps on your Bush-bashing site you might respond to this IBD editorial. But don’t even think about wasting your time doing it here.
Comment by TBlumer — May 30, 2008 @ 11:34 am
I’ll see your data points and raise you these (courtesy The Big Picture):
-Weakest two quarter growth since 2001 recession;
-Private inventory investment added 0.81% to GDP growth;
-Personal consumption expenditure unchanged at +1% (slowest since Q2 2001)
-Gross private domestic investment: -6.5% (previously -4.7%);
-Residential investment “improved” to -25.5% from -26.7% (most since 1981);
-Business fixed investment: -7.8% (improved from -9.7%);
-Exports weakened to +2.8% from +5.5%;
-Imports weakened to -2.6% from +2.5% ;
-Federal Government consumption expenditure and gross investment: +4.4% (+4.6% previously);
-State and Local Govt: 0.6% (+0.5% previously)
Point is, I think there’s more evidence of recession than of “not” recession. As to what CFNAI is flagging: It has NEVER been where it is today on a 3 month moving average without the economy being in recession. That’s just a simple fact. So, again, the question that needs to be answered is, if “it’s different this time” why is that the case?
Is the editorial you suggest I respond to about the war in Iraq (as it seemed to be via your link)? Do we even want to travel down that path?
Comment by Invictus — May 30, 2008 @ 12:39 pm
So I take it #9 isn’t in favor of slow or sustainable growth that has been advocated in the past by the liberal intelligencia? Everything to this point has been about bashing Capitalism and villifying Consumerism, now you have what you advocated in a slow growth economy and liberals are still whinning. Environmentalists are against economic growth, or any rise in the standard of living whether that be here in the US or abroad as in China or India since they claim humans are consuming the planet. So #9, what position are you actually advocating, Capitalism or Environmental-Socialism? From this we will see if your comments have validity.
Comment by dscott — May 30, 2008 @ 1:24 pm
#11, I can’t even get past your first point without busting you —
“Weakest two-quarter growth since 2001 recession”
Link
4Q02 + 1Q03 were weaker (1.4% total vs. 1.5% for most recent two). At least the last time I checked, 1.5% is bigger than 1.4%. Even strict compounding doesn’t save you. And I’m supposed to be paying attention to your crap?
Funny, that 2002-2003 period wasn’t a recession. How did that happen?
It looks like you’re criticizing the “bad” components of growth and ignoring the “good” ones. Do you have a personal problem with services, which took off like crazy?
Of course #12’s argument is a good one. Doctrinaire libs who are also enviros love complaining about the economy, but if enviros ever really had their way, we’d be asked to “understand the virtues” of negative growth.
As to IBD, it is about Iraq and other places. Read it and weep, but don’t bring that crap in here.
Comment by TBlumer — May 30, 2008 @ 4:53 pm
So #9, what position are you actually advocating, Capitalism or Environmental-Socialism? From this we will see if your comments have validity.
Here’s the position I’m advocating: That you — or anyone else on your behalf — actually rebut or address some of the economic data points we’re seeing now that, in the past, have flagged recession. Such data points include:
-The 3 month moving average of CFNAI
-The negative print of Final Domestic Demand (via BEA Table 1.4.1)
-The fact that Nonfarm Payroll Employment has peaked
-The fact that Industrial Production has peaked
-The fact that real income has peaked
-The fact that sales have peaked (via BEA Table 2BU, Line 1)
Those factors ALL play into a potential recession call, and instead of addressing them, now you seem to want to know if I’m a tree-hugger? I’m trying to stay on point here.
Comment by Invictus — May 30, 2008 @ 5:21 pm
I cited The Big Picture as the source for the items I posted in #11, so to the extent you “busted” anyone, it was Barry Ritholtz, not me, although if I had the time to fact-check his work — which is usually very accurate — I admit I should have done so. But I didn’t. My bad. Changes very little.
Here’s what I do know — per what should be #14 — and what I have researched myself, and what I know matters to the NBER:
-The 3 month moving average of CFNAI is recessionary
-The negative print of Final Domestic Demand (via BEA Table 1.4.1) is recessionary
-The fact that Nonfarm Payroll Employment has peaked is recessionary
-The fact that Industrial Production has peaked is recessionary
-The fact that real income has peaked is recessionary
-The fact that sales have peaked (via BEA Table 2BU, Line 1) is recessionary
I’m trying to stay on point here, man, but you guys make it hard.
Comment by Invictus — May 30, 2008 @ 5:33 pm
# 15, yawn –
GDP goes up by 1.4% in 2 quarters in 2002-2003, and it wasn’t a recession. It goes up by MORE, 1.5% in 2 quarters, in 2007-2008, and it is? Horse manure.
Last time I checked, things you say have peaked need to be going DOWN before there’s even the possibility of a recession. How bleeping stupid do you think we are?
Total production of goods and services has NOT peaked, though industrial production may have. Manfacturing is 15% or so of the economy. B,F,D. Services had a great 1Q08.
I don’t care to address the rest, because I don’t believe I need to; so I won’t. And I’ll betcha that I won’t ever need to, because we will find, by the time all the dust settles, that we weren’t in a recession during Q108.
Instead, I’ll refer you to my good friends at IBD, who surely know more than you or me:
HERE
Best excerpt:
And real disposable personal income — what you keep after taxes — is growing at a 1.6% rate.
You were saying what about income?
Comment by TBlumer — May 30, 2008 @ 10:15 pm
As I understand it, “yawn” is loosely translated as “I really don’t have the facts on my side, so I’ll simply be as dismissive as possible in the most condescending way.”
Is it possible, just possible, Tom, that in 2002-2003, despite relatively weak GDP, the other metrics the NBER watches were not in decline, as they are now. And that that might account for why there was no recession then whereas there might be one now?
Industrial Production has peaked. So has Employment. So has Sales. Real Personal Income has peaked and is currently flatlining (although it was down 1.8% in today’s release). CFNAI is clearly in the danger zone. Was any of that the case in ‘02-’03? I haven’t looked, but I’ll wager the situation wasn’t as dire.
I don’t care to address the rest, because I don’t believe I need to; so I won’t.
Please see my comment above re: yawn.
Your “good friends” at IBD seem to believe the economy’s lost jobs, so how smart can they be? To wit:
As for jobs, it’s true that, since the start of the year, some 220,000 nonfarm positions have been shed.
How credible can they be spewing nonsense like that?
What one keeps after taxes must be reduced by an inflation rate. It would appear IBD neglected that calculation, no?
What I was saying about income is that’s it’s down, notwithstanding your reference to IBD.
Comment by Invictus — May 30, 2008 @ 10:44 pm
“Yawn” means that you’re boring me, because you don’t have the predominance of the facts on your side, so you’re picking the ones that work for you, and ignoring what you don’t like.
IBD assumes you know what seasonal adjustment is.
IBD also knows what REAL disposable income means, which is after inflation. Apparently you don’t, or are so blinded by your determination that you didn’t see the word. That means income is not down. Zheesh.
Peaks mean nothing. Declines do, and only lots of ‘em. Come back when you’ve got enough of them to matter.
Comment by TBlumer — May 30, 2008 @ 11:16 pm
I’ll take the word of ML’s North American David Rosenberg, who (also) knows more than you or I, and has nailed this slowdown (recession) right from the start: “Real personal income excluding transfers, which is one of the four indicators the
NBER Business Cycle Dating Committee watches to confirm a recession, actually
fell by 0.2% MoM in April after a flat print (actually fractionally negative in
unrounded terms). The 3-month trailing annualized trend is now -0.4% and shows
a peak in February of this year. Combined with four consecutive months of
payrolls growth, a downturn in real business sales since October 2007 and a
slump in industrial production since January, it reinforces our view that the US
economy entered recession at the start of this year.” Those are all called FACTS. They may bore you or not, but they are incontrovertible. On the other side, you’ve done little but wave positive GDP as your rebuttal which, as we saw in 2001, is simply insufficient. I would appreciate it if you could rebut the facts — you know, as if this were an actual debate — instead of simply “yawning,” “ROTFLAO,” or banishing me.
Comment by Invictus — May 31, 2008 @ 1:37 pm
Positive GDP, Positive income growth, positive overall production/economic activity, lower unemployment rate, and positive real income gains. IIRC, those are NBER’s “big four.”
Other than that, I’ve got nothin’. (/sarc)
Your “facts that are incontrovertible,” aren’t. Which is why they bore me.
Comment by TBlumer — May 31, 2008 @ 6:44 pm
Tom, seriously, please let’s get this straight once and for all. You’re a bit off base on what you claim are the NBER’s “big four.”
Let’s see what the NBER itself says it looks at most closely, along with citations to exactly where you can find the data (via Page 8 of this document from BEA — http://www.bea.gov/papers/pdf/grimm.pdf):
1) Employment (please note that’s NOT “unemployment”) — It has peaked (see PAYEMS at the St. Louis FRED).
2) Monthly Real Personal Income — It has peaked (BEA Table 2.6, Subtract Line 14 from Line 1, then divide by Table 2.8.4, Line 1).
3) Industrial Production — It has peaked (see INDPRO at the St. Louis FRED).
4) Sales — Have peaked (see BEA Table 2BU, Line 1)
5) Aggregate Hours — Have peaked (see AWHI at St. Louis FRED).
Throw in CFNAI (http://www.chicagofed.org/economic_research_and_data/cfnai.cfm) and things really don’t look so good.
I don’t know what #20 is all about. There are no sources, no citations, no references. Just more vague references to things that are going up.
If you’d like to make a counterargument that’s actually fact-based, by all means have at it. I’m sorry that challenging you to actually rebut my argument is so “boring.”
Comment by Invictus — May 31, 2008 @ 9:59 pm
As stated earlier (#18):
Peaks mean nothing. Declines do, and only lots of ‘em. Come back when you’ve got enough of them to matter.
You don’t have ‘em. You’re wasting my time. You’re wasting your time.
Every item in #20 has been linked to and commented on previously at this blog. I’m not going to do your work for you.
From NBER — they look at:
“GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just AFTER the economy reaches a peak of activity …..”
I didn’t pick up wholesale/retail sales out of the big 5, not 4. That fifth factor appears to be in real decline though nominal increase. That’s one out of five that’s pointing the wrong way; the other four are pointing the right way.
If all you have is what you THINK is almost entirely a bunch of peaks, and you have few or no declines, you don’t have evidence that a recession is in progress. You MIGHT have evidence that a recession MIGHT be starting, IF the peaks are really peaks and not just temporary pauses, which we, of course, don’t know. Your entire line of argument is therefore incoherent.
Comment by TBlumer — May 31, 2008 @ 11:42 pm
Well, I guess NBER chair Marty Feldstein is also making an “incoherent” argument when he gets on Bloomberg TV and says that virtually every economic indicator they look at is “pointing down” and that “within the first quarter” the economic situation steadily deteriorated:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2M56v3ltLgE
But what does he know, anyway?
Comment by Invictus — June 1, 2008 @ 10:10 am
Like any org flak, his bunch needs work to justify its existence and reputation.
Too bad, by his org’s own definition, it doesn’t have any yet. It might, if the peaks go into declines, but that hasn’t happened yet.
Your non-responsive comment shows that you’re out of arguments.
Comment by TBlumer — June 1, 2008 @ 12:26 pm
You are going to call me nonresponsive? Surely you jest. Pot, meet kettle.
I pointed out to you that CFNAI has never been where it is right now without the economy being in recession. Your response to that: None.
I cite economist David Rosenberg, who wrote: “Real personal income excluding transfers, which is one of the four indicators the NBER Business Cycle Dating Committee watches to confirm a recession, actually fell by 0.2% MoM in April after a flat print (actually fractionally negative in
unrounded terms). The 3-month trailing annualized trend is now -0.4% and shows
a peak in February of this year. Combined with four consecutive months of payrolls growth, a downturn in real business sales since October 2007 and a slump in industrial production since January, it reinforces our view that the US economy entered recession at the start of this year.â€
So, let’s see, that’s a decline in several major metrics, cited by a leading Wall St. economist (along with the NBER’s Marty Feldstein and, by the way, the NBER’s Jeff Frankel). Your response: A non-sequitur, as many of your responses have been.
I’d respectfully suggest that if you want non-responsive, take a long look in the mirror, as you’ve rebutted nothing. The extent of your argument boils down to: GDP is positive, I’m boring you, GDP is positive, you’re ROTFLAO, and GDP is positive.
It’s typical (and very predictable) that, with the writing on the wall, folks will begin trying to discredit the NBER itself.
Comment by Invictus — June 1, 2008 @ 3:28 pm
Again:
If all you have is what you THINK is almost entirely a bunch of peaks, and you have few or no declines, you don’t have evidence that a recession is in progress. You MIGHT have evidence that a recession MIGHT be starting, IF the peaks are really peaks and not just temporary pauses, which we, of course, don’t know. Your entire line of argument is therefore incoherent.
Nope, with growth positive, at a level higher than any previous recession call, and four of the five things NBER deems critical going in the right direct (including the percentage of people looking for work who are finding it) the burden of proof is on you, and you’ve PROVEN nothing.
And yes, if NBER tries to call a recession even if growth never goes negative, esp never below 0.5% in any one quarter after all revisions, they’re objectively full of crap.
They were objectively full of crap in 2000-2001, and I said so here.
Comment by TBlumer — June 1, 2008 @ 4:05 pm