Things the Obama Admin and Its POS (Pork Over-Stuffed) ‘Stimulus’ Had No Part In (Bonus: More Evidence of No Recession Until 3Q08)
I suspect this will turn into a multi-part venture, because these kinds of things need to be documented as they occur.
Three things in the past week or so clearly fit the description of “Things Over Which The Obama Administration’s POS ‘Stimulus’ Had No Influence”:
- Housing starts were up 22.1% in February, beating expectations of a roughly 3% decline.
- Existing home sales were up 5.1%, again whipping expectations, this time of a 1% decline. The first-time homebuyer credit of up to $8,000 is a large element of this improvement. But that is something virtually everyone supported, because it’s an immediately stimulating tax cut. It has nothing to do with the hideous POS (Pork Over-Stuffed) portions of the plan.
- Durable goods orders were up 3.4% in February, beating expectations of a 2.0% decline (January’s contraction was significantly revised downward from -4.5% to -7.3%).
It took a month or so, because durables manufacturers can’t react on a dime, but the generally steep declines beginning in August clearly show that the Pelosi-Obama-Reid energy-starving, tax increase-promising magic had its effect.
The graph is also another entry into evidence showing that the National Bureau of Economic Research’s (NBER’s) claim that the country was in recession during the first half of 2008 lacks credibility.
Ignoring compounding, durable goods orders were up 0.3% from March to June. That’s not impressive, but it’s also not negative, meaning that it was not recessionary.
NBER says that a recession requires “a significant decline in economic activity spread across the economy” that is “normally visible in production, employment, real income, and other indicators.”
Historical results on the ground continue to show that for the most part there wasn’t any decline from March through June, let alone a significant one:
- Durable goods orders increased slightly (see above).
- Manufacturing overall was barely contracting, according to the Institute for Supply Management (March through June index values averaged 49.1%; a reading above 50% indicates expansion).
- Everything except manufacturing was basically okay until the June reading (March through June values were 49.6%, 52.0%, 51.7%, and 48.6%). That June reading of sentiment in the real world is where I detected that the POR Economy had begun sometime during that month.
- The ISM indices on a weighted-average basis show that the economy as a whole improved from March through May (values were 49.1%, 51.5%, and 51.4%).
- GDP wasn’t in decline. Instead, second quarter annualized GDP growth was 2.8%.
- Disposable income increased at an annualized rate of 10.7% in the second quarter, and would have been positive even without the tax stimulus payments of $75.4 billion during that period ($77.5 minus $2.1). (The annualized increase in disposable income was $380 billion; the non-annualized equivalent of roughly $95 billion comfortably exceeded the stimulus payments.)
The only thing consistently declining during that time was employment (March 26 reminder: And the seasonally adjusted employment drop as a percentage of the workforce during the first six months of 2008 was lower than during the previous two recessions). Declining employment alone does not a recession make; it never has.
The case that NBER blew its recession call from December 2007 through June grows ever more compelling. At worst, there was a mini-recession from December through February, followed by 3-4 decent months, followed by the POR Economy’s recession that began in July after it began taking hold in June.
Back to the original point of the post: The above good-news cites are examples of the economy attempting a recovery on its own, thanks largely to lower energy prices and lower mortgage rates. Certainly no one can legitimately claim any stimulus/Porkulus-related impact on the above results. Based on estimates of when the mislabeled “stimulus” money will actually be spent, no one will be able to do so until sometime this fall, if even then.