August 27, 2010

At WEOZ: The ‘Recovery Summer’ has been found! — In Germany

Filed under: Economy,Taxes & Government — Tom @ 2:54 pm

It’s here.

You’ll see it here at BizzyBlog on Sunday afternoon (link won’t work until then) after the blackout expires.

‘O Sheets’ of the Day on the Economy (See Update: The Non-Federal Economy Grew 1.0% in 2Q10)

Filed under: Economy,Taxes & Government — Tom @ 12:34 pm

The first “O Sheet” answers the question: “How much of a recovery has there been?”

Answer: “Far less than a full recovery” –


Four quarters into the “Rebound? What Rebound” recovery, we’re barely two-thirds of the way back to where we were when the recession as normal people define it began. If the economy somehow manages to eke out an annualized 1.5% consistently during the four quarters, we’ll finally be above where we were at the end of the second quarter of 2008

If you include population growth in the equation, the answer would be “far, far less.”

The second “O Sheet,” which arises primarily from looking through the extended version of today’s GDP report, answers the question: “How much has the federal government grown, and the rest of the economy shrunk, since the POR (Pelosi-Obama-Reid Economy’s recession as normal people define it began?”

Answer: “More than they should have in each case” –


The numbers above treat Government/General Motors and Chrysler as part of the private sector. So the answer really is “Much more than they should have in each case.”

Update: Yeah, I know there’s a tiny 0.03% difference between the total contraction in the first “O Sheet” vs. the second. My reaction: “O Sheet.” The difference involved is actually immaterial to the validity of the points made.


UPDATE: A supplemental “O Sheet,” showing that the non-federal economy grew by only 1.0% –


The non-federal economy is still over 2% smaller than it was when the POR Economy began.

2Q10 GDP Revision Post (Was Annualized +2.4%; Now +1.6%)

Filed under: Economy,Taxes & Government — Tom @ 8:07 am

ObamaFunnyMoneyThis is one of the more anticipated GDP releases I can recall.

It’s pretty widely acknowledged that a big downward adjustment from July’s initial estimate of  an annualized +2.4% is on the way. The only question, as noted in the early morning BizzyBlog/NewsBusters post, opinions are varying widely on how far down it will be. A quick recap:

  • Reuters — 1.4 percent.
  • The Wall Street Journal — +1.3%.
  • Zero Hedge — anywhere from just below 1% to maybe +1.2%.
  • Per Jeff Poor at NewsBusters, Jim Cramer is predicting +0.5% and a “mass panic” in the markets.
  • On the assumption that BEA’s bureaucrats are still doing their job without getting pressured by the administration to make things look good (still a safe assumption, I believe), I’d like everyone, especially Cramer, to be wrong. I don’t think I’m going to get my way.

    Also as noted early this morning, the press is placing an enormous amount of pressure on Ben Bernanke today to give the speech of his life 90 minutes after the GDP news comes out — as if what he says is going to somehow keep the economic and psychological damage inflicted by the POR (Pelosi-Obama-Reid) Economy from getting any worse. It’s as if Ben’s bombast can somehow undo the ill effects of reckless and irresponsible fiscal and tax policy that is killing jobs, perpetuating massive uncertainty, and creating pervasive malaise. If it were that easy, Bernanke would have put his “quantitative easing” strategy on the shelf and gone on rubber-chicken circuit for the past two years.

    The report will be here at 8:30 a.m.

    THE NEWS: Playing the expectations game, it’s a serious dip that’s not as serious as expected (bold is mine) –

    Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.6 percent in the second quarter of 2010 …

    … The increase in real GDP in the second quarter primarily reflected positive contributions from nonresidential fixed investment, personal consumption expenditures, exports, federal government spending, private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

    … Final sales of computers added 0.03 percentage point to the second-quarter change in real GDP after adding 0.10 percentage point to the first-quarter change. Motor vehicle output subtracted 0.08 percentage point from the second-quarter change in real GDP after adding 0.74 percentage point to the first-quarter change.

    … Real exports of goods and services increased 9.1 percent in the second quarter, compared with an increase of 11.4 percent in the first. Real imports of goods and services increased 32.4 percent, compared with an increase of 11.2 percent.

    … Real final sales of domestic product — GDP less change in private inventories — increased 1.0 percent in the second quarter, compared with an increase of 1.1 percent in the first.

    … Real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — increased 4.9 percent in the second quarter, compared with an increase of 3.9 percent in the first.

    … The “second” estimate of the second-quarter increase in real GDP is 0.8 percentage point, or $25.0 billion, lower than the advance estimate issued last month, primarily reflecting an upward revision to imports and downward revisions to private inventory investment and to exports that were partly offset by an upward revision to personal consumption expenditures.


    UPDATE: The bolded paragraph above struck me as pretty important. The first quarter’s 3.9% increase in real domestic purchases was pretty close to that quarter’s annualized GDP increase of 3.7%. But the second quarter’s result was nowhere near it (1.6% growth vs. 4.9% increase in purchases). So consumers and businesses bought more stuff, but less of what they bought was produced in the USA. It looks like we missed a very big opportunity to break out of the doldrums.

    If so, why did it happen? The usual litany of reasons would appear to apply: high taxes (currently high, imminently higher), overregulation, pervasive economic uncertainty, and, as Michelle Malkin has pointed out in a series of posts during the past week (here, here, and here, at least), the administration’s war on jobs.

    All of these, plus perhaps some issues relating to free/managed/subsidized trade, have become more serious inhibitions to economic growth during Obama’s 19 months in office (the uncertainty dates back to the middle of 2008, when the POR [Pelosi-Obama-Reid] Economy and the recession As Normal People Define It began), and are holding back people who might otherwise seize opportunities from taking advantage of them to produce the additional goods and services people might buy. So foreign goods (and perhaps services) are filling the vacuum. Part of it could be oil, thanks to the drilling moratorium.

    NEW POST: “‘O Sheets’ of the Day on the Ecomony”

    AP to Bernanke: Save Us, Ben! (Barack, Nancy, and Harry Who?)

    torn-dollarSometimes you just have to chuckle at the transparent motivations of business writers in the establishment press.

    Two Associated Press reports from this afternoon, one from Stephen Bernard and another much lengthier piece from Jeannine Aversa, attempt to set the template for Friday morning’s reportage: Despite all the bad news, including a serious downward revision to second-quarter economic growth, it’s up to Big Ben Bernanke to calm everyone down, and magically return the economy to some kind of even keel.

    No pressure there, big guy.

    Aversa’s earlier report lays it on especially thick:

    Bernanke’s top tool now may be power of persuasion

    The economy appears to be stalling. Yet the Federal Reserve has run out of simple steps it can take to revive it.

    That’s the test facing Fed Chairman Ben Bernanke as he addresses a conference Friday in Jackson Hole, Wyo. Without any easy options left, Bernanke must try to prevent another recession by persuading people and businesses to feel confident enough about the future to spend more today.

    Weak consumer spending and a scarcity of jobs have put the economy at risk of lapsing into another downturn. Short-term interest rates near zero have yet to rejuvenate the economy. The benefits of federal stimulus programs are fading, and Congress has declined to pass any major new economic aid.

    That puts increasing weight on Bernanke’s words. The Fed chairman will speak at 10 a.m. EDT (8 a.m. local time), less than two hours after the government spells out just how fragile the economy is. The Commerce Department is expected to report the economy grew at an anemic annual rate of 1.4 percent from April to June. Growth in the current quarter is shaping up to be just as weak.

    Bernanke’s task isn’t confined to restoring public confidence. Equally vital, he must forge consensus within the fractious Fed itself. Some Fed officials have been reluctant to have the central bank invest more money than it already has to try to stimulate borrowing and spending.

    How can the Fed’s almost out-of-gas monetary policy and one speech by the guy who runs it save us, when it’s the people who are in charge of fiscal policy who have brought the economy to this awful juncture? Incredibly, the names of Barack Obama, Nancy Pelosi, and Harry Reid do not appear anywhere in Aversa’s report. It’s as if they’re just in the stands, no more or less important than the rest of us, waiting to see what kind of rabbit Big Ben might pull out of his hat.

    Aversa also writes:

    … at the heart of Bernanke’s challenge: How to persuade individuals and companies to feel good enough about their financial futures to buy homes and cars, expand payrolls and resuscitate the recovery? Beyond the rate-cutting and other actions Bernanke’s Fed already has taken, few strong ideas have emerged for what else the Fed should be doing.

    Again, why is this all being dumped on supposedly broad-shouldered Ben? He didn’t create the pervasive atmosphere of economic uncertainty that’s has sent businesspeople, entrepreneurs, investors, and consumers cautiously scurrying to the sidelines. Pelosi, Obama, and Reid did that, and continue to.

    Ben Bernanke hasn’t been a one-man wrecking crew attacking the employment market. On Wednesday, Michelle Malkin chronicled how Barack Obama has been that man.

    Ben Bernanke isn’t the guy who will be responsible for massive tax hikes that will kick in on January 1 unless Congress does something and the President signs off on it. That’s Nancy Pelosi’s and Harry Reid’s problem.

    Ben Bernanke isn’t the guy spending money like crazy. Barack Obama’s government, with support of Pelosi, Reid, and the Democratic Congress, is doing that.

    The later report from the AP’s Bernard (“Stocks slip as caution about the economy returns”) covered another down day in the stock market, which in this case saw the Dow close below 10,000. The AP reporter covered all kinds of things influencing the market: home sales (actually the lack thereof for both new and existing homes), weekly initial unemployment claims (which did at least fall this week on a seasonally adjusted basis after going mostly the other way during previous weeks), and, of course Bernanke’s upcoming speech. Tomorrow’s GDP report? He didn’t even mention it, nor did he bring up the names of Obama, Pelosi, or Reid.

    Beside’s AP’s annualized +1.4% estimate above, here are some other predictions of what Friday morning’s GDP report might bring:

    • At the Wall Street Journal — “Economists expect to see the initial estimate of 2.4% growth cut to a more modest 1.3% gain.”
    • Reuters expects GDP to “be revised lower to an annual pace of 1.4 percent.”
    • Zero Hedge cites sources who believe it’s going to be in the neighborhood of below 1% to maybe +1.2%.
    • As noted by Jeff Poor at NewsBusters, Jumpin’ Jim Cramer is predicting +0.5% and a “mass panic” in the markets.

    At the UK Guardian, Katie Allen is also singing from the “It’s All Up to Ben” hymnal (“Ben Bernanke under pressure to prop up US economic recovery”). Again, it’s as if Obama, Pelosi, and Reid, who again are not mentioned, don’t exist.

    Are they really going to try to pin the economic malaise on Ben Bernanke if he isn’t the second coming of Winston Churchill tomorrow? They can’t be serious, they’re certainly not credible, and although stranger things have happened, it’s hard to see how it can work.

    Cross-posted at