July 31, 2011

Debt-Ceiling Deal Allegedly Reached (See Internal Update: Unacceptable)

Filed under: Economy,Taxes & Government — Tom @ 9:09 pm

For reasons explained previously, mainly that so-called spending “cuts” will only be reductions from an inflated CBO baseline, that they aren’t actual reductions in year-over-year spending, and that they are more than likely to be back-loaded with minimal immediate impact, I’m not pleased with what has transpired.

I also question the very existence of an “agreement,” given that our not-credible president is the one who has announced it in “a surprise appearance,” and may be creating artificial last-minute pressure by doing so. How many times did we hear that Boehner and Obama were “close” from the establishment press 1-2 weeks ago, when it was NEVER the case? Update, Aug. 1, 2:15 p.m.: Told ya “Speaker John Boehner (R-Ohio) will need Democratic votes to clear the bill through the lower chamber. How many remains unclear.”

Here’s the situation as explained at the USA Today blog by David Jackson:
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AP’s Hurst Implies Default Would Happen on Aug. 2 Without Debt-Ceiling Increase, Claims Past Debt Limit Raises ‘Routine’

In his roughly 10 a.m. report this morning (HT to a NewsBusters emailer), the Associated Press’s Steven R. Hurst opened by saying that “The top Republican in the Senate said Congress and the White House were very close to a deal on raising the limit on U.S. borrowing that would avert an unprecedented default on America’s debt, ending one of the nastiest partisan fights in recent memory.”

In his second sentence, he wrote, based on a statement from Republican Senate Majority Leader Mitch McConnell, that an agreement would “likely extend U.S. borrowing authority, which expires on Tuesday, beyond the 2012 presidential and congressional elections,” giving casual readers the impression that default will occur if the borrowing authority ends.

That simply isn’t so. Who says so? Moody’s says so, as carried in a live blog item at the Wall Street Journal on Tuesday (HT Verum Serum):

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IBD on GDP Inadvertently Explains the G-A-P in Tax Collections

Filed under: Economy,Taxes & Government — Tom @ 11:35 am

PostRecessionReaganVsObama8Qtrs0711Why isn’t the tax money rolling in like it should in a recovery (even in the current pathetic imitation of one)?

The answer to that question can be inferred from a couple of points made in an Investors Business Daily editorial on Friday (bolds are mine):

… all told, from the end of 2008 to this year, the government estimates U.S. GDP was $314 billion less than first estimated, not including this year’s revisions.

Digging down into the data shows an even gloomier picture. Per capita GDP, the ultimate measure of both well-being and productivity for a nation, today remains lower in real terms than it was in 2007.

In the second quarter of this year, average annual real output per person stood at $42,499 — still 3.3% below its peak of $43,956 in the fourth quarter of 2007.

Looked at yet another way, the Commerce Department also estimates “potential” GDP — the size the economy would be with all resources used efficiently.

In the second quarter of this year, real GDP stood at a real annual rate of $13.33 trillion. But our potential, the government says, is $14.25 trillion. So we’re missing $920 billion in GDP, and Obama’s first term isn’t over.

Call this lost potential the Obamanomics tax.

If Barack Obama and the Democrats really wanted more tax revenue, they would have chosen economic policies which would have realized most of the potential identified above (which in my opinion is understated, because it probably doesn’t take into account business innovations and expansions which didn’t happen because of regulatory overreach, tax disincentives, and the looming Obamacare nightmare). The $920 billion gap in real GDP IDB noted is expressed in 2005 dollars, so it’s really about $1 trillion in today’s dollars. If we were achieving that, extra collections to Uncle Sam could be rolling in at the rate of about $300 billion a year, which would put us in the neighborhood of where tax collections were in 2007 and 2008.

Looked at another way using the graph at the top right comparing the Reagan Era’s Recovery to Obama’s, the economy could be (really should be) about 8% bigger today (12.9% vs. 5.0%). If so, GDP in today’s dollars would be about $1.2 trillion higher, and potential extra tax money rolling in to Uncle Sam would be about $350 billion greater.

But that’s not what Obama and Democrats really want. Oh sure, they’d like the money, but what it’s really all about is punishment, redistribution, and perverse retribution against “the wealthy” (except, of course, cronies who know how to play the favors game). If it weren’t, they’d have long since chosen policies which have historically increased economic growth and taxes coming into the government at the same time. But they won’t.

Red States, Including the ‘Newly-Reds,’ Excel at Job Growth

Filed under: Economy,Taxes & Government — Tom @ 7:59 am

But for them, the U.S. economy might already be in another recession.

_______________________________________

Note: This column went up at Pajamas Media and was teased here at BizzyBlog on Friday.

_______________________________________

Now that state employment information for the first half of 2011 is available, one can’t help but notice which states are up, as well as a particularly telling example of one which is down.

Though admittedly the comparison isn’t apples to apples, it’s worth noting that of the 757,000 seasonally adjusted jobs added in the overall economy this year from January through June, the ten states with the highest percentage employment growth were responsible for well over half, or 390,000 of them, even though they only have about 20% of the nation’s population:

SeasonallyAdjStateJobGrowthTop10First6Mos2011

What’s more, as the economy by all accounts decelerated in May and June, the ten states above stayed relatively strong. While the country as a whole gained only 43,000 seasonally adjusted jobs in those two months, they added over 90,000. Democrats who accuse Republicans of wanting the economy to tank, please note: If it weren’t for these ten states, we might already be in the midst of another recession instead of possibly heading towards one, as Goldman Sachs and others have recently asserted.

Six of the ten (Nebraska, North Dakota, Oklahoma, Texas, Utah, and Wyoming) have been conservative strongholds for decades. Montana, though its governor and two senators are currently Democrats, has been a red state in all but one presidential election since 1972. The final three highlighted above — Michigan, Ohio, and Wisconsin — were previously governed by Democrats who were replaced with GOP governors this year. All three are in the early stages of what may be remarkable turnarounds. I call them “the newly-reds.”

Led by Governor John Kasich, Ohio’s January-June seasonally adjusted jobs pickup is the Buckeye State’s best performance since 1994. Not coincidentally, that’s about when then-Governor George Voinovich stopped being even sort of conservative. Regardless of the party in charge, Ohio was governed like a blue state until Kasich came along. Even more impressive, in terms of what has actually occurred (i.e., the not seasonally adjusted figures), the state has added just over 200,000 private-sector jobs in the past five months, the best February-June total since 1999, when the national economy, largely due to Kasich’s previous work on the federal budget as a congressman, was far stronger.

In March, Kasich and the General Assembly tentatively won a bitter battle with the state’s public-sector unions and passed “SB5.” As I noted several weeks ago, SB5 prohibits public employee strikes, limits the subjects of collective bargaining, requires public employees to pay 15% of their health insurance costs, and prohibits forced union “contributions” by nonunion public workers. In June, the Governor signed a two-year budget which closed a projected $8 billion deficit dumped on the state by predecessor Ted Strickland without raising taxes and while keeping all-funds spending virtually flat. The Buckeye State reaped an almost immediate reward: Standard & Poor’s, which had downgraded the state’s debt rating just as Strickland departed in January, revised it to “stable” shortly after the budget’s passage.

The SB5 victory just noted is tentative because opponents have succeeded in getting a repeal initiative on the November ballot. It may not be an exaggeration to say that the state’s nascent recovery hangs in the balance.

Michigan’s performance is a bit less impressive, principally because it still has so far to go. Wolverine State employment contracted by over 600,000 on Democratic Governor Jennifer Granholm’s watch, so one shouldn’t be too impressed with the improvements achieved just yet. Nevertheless, Republican Rick Snyder, who succeeded Granholm, seems to have put a foundation in place for continued employment progress. In stark contrast to recent contentious budget battles, the state created an atmosphere of relative certainty by passing a budget four months ahead of time. Most notably, it features “a big reduction in business taxes,” which consumers end up paying anyway, and “an almost equal increase in income taxes.”

Then there’s Wisconsin. Has any state’s governor ever been vilified as severely and viciously as Scott Walker during his battle with the state’s public-sector unions earlier this year? Walker won’t get a thank-you card from them any time soon, but he should, because the alternative was massive government layoffs, most of which, as the Weekly Standard’s John McCormack has noted, have been avoided:

Walker’s budget repair bill, known as Act 10, is working just as he promised. To make up for a $2.8 billion deficit without raising taxes, state aid to school districts (the largest budget line) was reduced by $830 million. Act 10, Walker said, would give districts “the tools” needed to make up for the lost money as fairly as possible.

… Now that the law is in effect, where are the horror stories of massive layoffs and schools shutting down? They don’t exist​—​except in a couple of districts where collective bargaining agreements, inked before the budget repair bill was introduced, remain in effect.

McCormack goes on to explain that schools in Milwaukee and Kenosha have each laid off hundreds of teachers because those districts’ unions “cleverly” concluded contracts which avoided the employee healthcare and pension contributions contained in Walker’s budget repair bill. Teachers who have lost their jobs might be questioning union leaders’ “wisdom.” Meanwhile, the state’s employment pickup this year is more than triple that seen under Democrat Jim Doyle during all of 2010.

As to poorly performing states, the booby prize goes to Connecticut, which after eking out small early gains, has lost 9,000 seasonally adjusted jobs in the past two months. Only a fool would believe that this result has nothing to do with Democratic Governor Dannel Malloy’s poor public policy choices since he took office this year.

Malloy pushed billions of dollars of tax increases through the Nutmeg State’s legislature with promises that he would rein in spending in negotiations with the state’s unions. Fat chance of that. As of when this column was written, the unions, in the midst of a 20-year contract expiring in 2017 (you read that right), still hadn’t budged, even though because of their intransigence Malloy had to lay off over 6,500 state employees earlier this month.

Imagine that. A Democratic Party politician promises he’ll rein in spending after he gets his “needed” tax increases, and then fails in his followthrough. We’ve heard that tune far too many times, including now from President Obama and Democrats in Washington. Far too often in the past, spendaholic Dems have been accompanied off the cliff by go-along, get-along Republicans. Governors Kasich, Snyder, and especially Walker have shown that the “newly-reds” have a better way.

Positivity: World Trade Center cross still consoles victims, priest says

Filed under: Positivity — Tom @ 7:00 am

From New York City:

Jul 29, 2011 / 10:55 am

The World Trade Center cross is still a “sign of comfort” to many people, says the Franciscan priest who describes himself as its “unofficial guardian.”

On Sept. 13, 2001 construction worker Frank Silecchia found a 20-foot, cross-shaped T-beam from World Trade Center 1 standing almost upright in the wreckage of World Trade Center 6.

Fr. Brian Jordan, O.F.M., blessed the cross later that year on Oct. 4 and promised that it would be preserved.

Now almost 10 years after the September 11, 2001 terrorist attacks, the priest again blessed the cross in a July 23 ceremony before its relocation to the 9/11 Memorial and Museum.

“It’s a sign of consolation and comfort for those who lost loved ones,” Fr. Jordan told CNA on July 28. “For the dead, the cross signifies the death of Jesus Christ. It also gave hope and support to the living, especially the rescue and recovery workers, the firefighters, polices officers, construction workers and many others.”

The Franciscan priest, who is in residence at New York City’s Holy Name Parish, played his own role in responding to the destruction which killed thousands. He ministered among construction workers, worked with family members and uniformed service members, and blessed “many bodies and body parts.”

“We saw evil at its worst, but goodness at its best,” Fr. Jordan said. “The goodness was that Americans came together in those weeks. New York City came together in those weeks. People of all ethnic and religious groups and economic backgrounds came together. I was very proud of that.”

In the months afterward, the cross “dramatically” affected others, both Christians and non-Christians.

He particularly recalled a Mother’s Day Mass in 2002, when mothers who lost children or grandchildren and their husbands all gathered at the cross.

Two groups of U.S. Army special forces also attended, without telling anyone else in advance.

“One group had just returned from Afghanistan, while the other was preparing to go,” the priest reported.

“At the kiss of peace, to see these mothers embrace these young men who came from war, who were about to go, there wasn’t a dry eye in the house,” Fr. Jordan said. “I don’t care if you are John Wayne. Anyone who has any heart or emotion in them will start crying when they see the mothers who lost their children embracing soldiers who are going to war. …

Go here for the rest of the story.

July 30, 2011

GDP Media Coverage, Part 3: AP Pair Pins Prime Blame on Gas Prices, Finally Cites Uncertainty — Over Debt Ceiling

The AP’s coverage of the U.S. economy late Friday focused on high gas prices as the dominant, uh, driver of this year’s anemic growth both visually and in its text.

As will be seen after the jump, the graphic at the AP’s national site is of a gas price sign. The final sentence in the caption of the full-size version reads “High gas prices and scant income gains forced Americans to sharply pull back on spending.”

The underlying report by Christopher Rugaber and Paul Wiseman predictably mentioned gas prices first and foremost, tagged debt-ceiling negotiations as a suddenly important contributor to economic uncertainty (where have they been while President Obama, his cabinet, his czars, and his hyperactive regulators have been injecting uncertainty in megadoses during the past two years?), and relayed Ben Bernanke’s months-old warning that cutting back too much on government spending would hinder economic growth:

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‘Honey, They Shrunk the Private Sector’ Update

Filed under: Economy,Taxes & Government — Tom @ 10:39 am

From Table 3B (Real Gross Domestic Product and Related Measures — Billions of chained 2005 dollars; quarters seasonally adjusted at annual rates) in yesterday’s GDP full release, comparing federal government, all government, and private sector growth or contraction since the recession as normal people define it began, and since the recession as the National Bureau of Economic Research defines it began (figures are in billions):

GDPgrowthGovtAndPvtTo2Q11

Not a lot to say, except the usual: “Rebound? What Rebound?

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Previous Post: February 7, 2010 — Honey, They Shrunk the Private Sector

WSJ on the GDP Updates

Filed under: Economy,Taxes & Government — Tom @ 9:52 am

PostRecessionReaganVsObama8Qtrs0711WSJpostRecessionChartReaganVsObama0711The Wall Street Journal has updated its version of the Reagan v. Obama post-recession GDP comparison at the immediate right. (Update, 7:30 p.m.: Yours truly’s version is at the far right, showing that the Reagan post-recession outperformed Obama’s by a factor of over 2.5 in two years, and by a fact of over 4 in its second year.

Its editorial says the right things, but its solution paragraph is perfunctory and fails to go to the heart of the problem — namely President Barack Obama and his grim band of “progressives” (bolds are mine):

The Obama Recovery
Why there is a growth recession, and what to do about it.

Americans already know that economic growth is flagging, but Friday’s second quarter GDP report confirms it: The current recovery, already one of the weakest on record, nearly stalled in the first half of 2011.

… The historical pattern is that the deeper the recession, the more robust the recovery.

This tale of two recoveries is an object lesson in economic policy. Taking office in 2009, President Obama embarked on one of the greatest reflation bets in history. He deployed the entire arsenal of neo-Keynesian policies to lift domestic demand, much as former White House economist Larry Summers still instructs at Harvard and most of the media still recommend.

The bet was that with all this stimulus the economy would rebound as it did in the 1980s. Most of Washington and Wall Street believed that Mr. Obama was set up beautifully to inherit a normal recovery, claim victory for his policies, and ride easily to re-election. The problem is that the policies haven’t worked. We are left with slow growth, high unemployment and $4 trillion in new debt.

The architects of this Keynesian debacle now offer the ex-post explanation that recoveries that follow financial panics are always slower. And there is no doubt that the financial meltdown has required banks, businesses and consumers to shore up their balance sheets and pay down debt.

But this is all the more reason to have pursued policies that nurture business and consumer confidence, rather than frighten them into taking fewer risks. An economy recovering from financial duress needs incentives to invest again, not threats of higher taxes. It needs encouragement to rebuild animal spirits, not rants against “millionaires and billionaires” and banker baiting. …

these folks (in the liberal political class) are intellectually tapped out. They can’t explain their current failure any more than they could the stagflation of the 1970s.

The only way out of this mess is to return to the growth policies that nurtured the boom of the 1980s. The circumstances aren’t the same, so some of the policy choices will have to be different. But the principles are the same: Encourage businesses to expand, rather than government; let markets allocate capital, rather than politicians; liberate entrepreneurs by reining in the regulatory state.

The Obama malaise wasn’t inevitable and needn’t continue. It will end when our political class admits that its nostrums have failed and it is time to once again free the creative energies of the American people.

The second-last excerpted paragraph ignores what cannot be ignored: This president, and this administration cannot abide by a recovery that isn’t achieved on their terms. They would prefer no recovery at all to a recovery which involves the 1980s-like policies which worked. Nothing short of their removal from power or utter marginalization will bring about a legitimate recovery.

Positivity: 9-year-old girl’s clean water wish takes off after her death

Filed under: Positivity — Tom @ 7:00 am

From Seattle (HT Daryn Kagan):

updated 7/26/2011 2:51:15 PM ET

Moved by Rachel Beckwith’s story, donors from across the world open their wallets to charity

Rachel Beckwith wanted to raise $300 by her ninth birthday to help bring clean water to people in poor countries. Donors from across the world are making sure her wish is realized after her death, perhaps a thousand times over.
Rachel was about $80 short of her goal when she turned 9 in June, and then a horrific highway traffic accident took her life away last week. But news of the Bellevue, Wash., girl’s pluck and selflessness emerged after the tragedy, and it is inspiring thousands of people — most of them strangers — to push her dream along.

By Tuesday afternoon, her webpage that was set up to take contributions for charity:water, a nonprofit organization that brings clean drinking water to people in developing nations, had attracted more than $200,000 in pledges.

“What could have been simply a senseless ending to such a beautiful beginning of your story has turned into something so much more. I hope that if at all possible the obvious compassion so many others have shown in taking up your empathetic cause brings some peace to you and your family,” wrote one anonymous donor who pledged $31.

… Rachel had learned about charity:water’s work through EastLake Church, and on her mycharitywater.org webpage she explained why she wanted to raise $300.

“On June 12th 2011, I’m turning 9. I found out that millions of people don’t live to see their 5th birthday. And why? Because they didn’t have access to clean, safe water so I’m celebrating my birthday like never before. I’m asking from everyone I know to donate to my campaign instead of gifts for my birthday. Every penny of the money raised will go directly to fund freshwater projects in developing nations.”

Although she fell $80 short of her birthday goal, that was just the beginning.

Donations started flowing in when community members publicized her wishes after the accident, and really took off after her story appeared on KING 5 TV, in The Seattle Times and other local media outlets.

Rachel’s story also spread on social media, getting a boost from tweets by actress Alyssa Milano and Seattle Seahawks quarterback Matt Hasselbeck, KING 5 reported. …

Go here for the full story.

July 29, 2011

GDP Media Coverage, Part 2: Time’s Error-Prone Embarrassment

This afternoon’s report at Time.com’s misnamed Curious Capitalist blog by Roya Wolverson (“GDP Report: What It Tells Us About the Debt”) is an embarrassing hash of omissions, errors, and gratuitous political points.

Ms. Wolverson’s most obvious omission is her failure to mention the government’s breathtaking downward revision to first quarter gross domestic product growth from the annualized 1.9% announced in late June to today’s revised 0.4%. That’s a nearly 80% hit compare to where we thought we were just a month ago, indicating how anemic the so-called recovery has been. It also gives one reason to doubt that today’s 1.3% figure for the second quarter will hold up in subsequent revisions.

What follows are excerpted paragraphs containing just some of Ms. Wolverson’s errors and political postures:

The bad news just keeps coming.

The U.S. economy grew even less than expected in the second quarter, at a rate of 1.3% [1], down from what many economists predicted would be 1.8% or higher [1]. The reasons for the continued lackluster performance haven’t changed. Consumers, squeezed by higher gas and other prices, are buying less of everything from electronics to meals out to new furniture. Japan’s tsunami, which raised production costs for U.S. auto makers, hasn’t helped.

Those factors are keeping a lid on U.S. jobs, which are, of course, the economy’s ticket to higher short-term growth.

But the dismal overall growth numbers masked some potentially good news for U.S. jobs. On the bright side, businesses spent more (up 6.3%) [2] in the second quarter, and in a rare move, investments in housing ticked up (3.8%). Those are crucial for U.S. job prospects, since the bulk of job creation comes from stifled small businesses, which rely most on a rebound in housing to invest and spend.

So far, small business hiring has been dragging for two reasons. One is because those businesses can’t get access to credit, and the other is because they’re reluctant to borrow given the slew of economic uncertainties ahead. [3]

… The good news out of the GDP numbers is, if housing investment continues to tick up and buoy property values, it will provide huge relief where the jobs market (via small banks and small businesses) needs it most.

… Another key takeaway from the Commerce Department’s GDP report is that much of the drag on growth in the second quarter came from government pullbacks. Government represented 1.23 percentage points of the overall growth drop [4], with state and local cuts accounting 0.41 percentage points of that and defense cuts making up 0.74 percentage points [4]. The sharp drop off in state and local government spending (a 3.4% drop) [5] reflects the dry up in federal stimulus, which has forced local authorities to slash tens of thousands of jobs and billions of dollars in spending to comply with balanced-budget requirements.

The current debt debate is bound to make things worse. …

the very policymakers scrambling to make good on our obligations by slamming on the breaks (sic) are the ones threatening to escalate government debt. [6]

Notes:

  • [1] — Throughout her report, Wolverson never gives any indication of an understanding that the figures presented are annualized. This will become clearer in a later note, but for now I’ll just note that any casual reader will believe that the economy actually got 1.3% bigger in the second quarter, instead of roughly 0.325% bigger.
  • [2] — Business spending went up an annualized 7.1%, not 6.3%, as seen in this cobbled-together graphic from Table 1 of the BEA’s full report. Wolverson’s 6.3% is the figure for nonresidential fixed investment.
  • [3] — Small business credit availability is hardly an issue when there’s little desire to hire or expand. Steve Wynn of Wynn Resorts expressed current business sentiment perfectly earlier this month when he referred to the palpable “fear” and “fright” throughout the business community. The Obama administration, including the President himself, his cabinet, his czars, and his frontline regulators are primarily responsible for creating our Fear-Based Economy. There’s reason to believe that we are at the point where there is nothing they can do to mitigate that fear short of leaving the stage.
  • [4] — As shown here in this graphic assembled from Table 2, government spending’s contribution to second quarter GDP was -0.23 points, not -1.23 points. The -0.74 points she assigns to defense cutbacks occurred in the first quarter. Zheesh, babe; check your work.
  • [5] — As stated in Note [1], Wolverson seems to believe that state and local government spending really dropped 3.4% during the quarter, instead of by about 0.85%. It’s hard to see how an actual drop of less than 1% translates to “slash(ing) tens of thousands of jobs and billions of dollars in spending.”
  • [6] — Soooooo predictably, we can’t stop spending or the world as we know it will end. It’s much closer to the truth that failure to stop spending for decades, most particularly in the past three years, is why the world as we know it is in danger of ending.

Really, Time, can’t anybody there play this game? Or could you at least make a couple of obviously needed corrections?

Cross-posted at NewsBusters.org.

TIB Broadcast Is Tonight

Filed under: News from Other Sites — Tom @ 5:53 pm

I don’t tease it enough, but go here to listen live and here for the live blog. Participants will include yours truly and co-bloggers at Weapons of Mass Discussion Matt Hurley and Mark Garbett.

Topics will include, as would be expected, Ceiling Our Fate, the “newly-red” states, the tanking and downwardly revised POR/Fear-Based Economy, and other matters of sensible conservative interest.

GDP Media Coverage, Part 1: AP ‘Somehow’ Misses That the Economy Hasn’t Fully Recovered

This morning, Christopher Rugaber’s coverage of the news from Uncle Sam’s Bureau of Economic Analysis about the growth in the nation’s Gross Domestic Product (GDP) at the Associated Press appropriately characterized it as indicative of a “sharp slowdown” and “extremely bad” (via a quoted economist).

Today’s report carried an advance estimate of second-quarter growth of an annualized 1.3%. As a result of revisions going all the way back to 2003, the BEA’s report also included a steeply reduction to 0.4% for the first quarter (down from the 1.9% reported last month), deeper contractions during the recession’s roughest quarters, and net slightly lower growth figures since the recession officially ended in June 2009.

The big story Rugaber missed — and which I suspect the rest of the media will also miss — is that two full years after the recession ended, the economy, based on today’s numbers, has not yet fully recovered, as seen in the following graphic (Source data: Table 3A at the BEA’s full report):

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Today’s GDP Headline Should Be: Economy Has STILL Not Fully Recovered From Recession, No Matter How You Define It

Filed under: Economy,Taxes & Government — Tom @ 11:09 am

Before today’s GDP revisions going back to 2003, it was thought that the economy had officially recovered from the recession — whether defined by normal people (two or more consecutive quarters of contraction, which began in the third quarter of 2008) or by the National Bureau of Economic Research (which pegs the beginning as December 2007).

Today’s net downward revisions to 2008, 2009, and 2010 show that a full recovery since, while close, has STILL not yet officially occurred — a full two years after the recession by both definitions ended in June 2009 (Source: BEA Table 3B here):

GDPsinceRecessionsBeganTo2Q11

So not only in terms of employment, but even in terms of growth, we can still say “Rebound? What Rebound?”

Anyone can eyeball the numbers here and see that the economy under Ronald Reagan clearly recovered by the end of its third post-recession quarter.

The only thing Barack Obama’s economy has in common with Reagan’s is that it’s being presided over by a guy whose first name contains six letters.

2Q11 Gross Domestic Product (072911); An Annualized +1.3%; OMG, 1Q Written Down to +0.4%

Filed under: Economy,Taxes & Government — Tom @ 8:15 am

ReaganVsObama8QtrsDraft0711The graphic on the right (to be revised elsewhere, eventually) lists what happened during the first eight post-recession quarters under Ronald Reagan to what has reportedly happened during the first seven under Barack Obama. I can only tell those who are tiring of the Reagan comparisons being made here that Obama, his party and press apparatchiks continue to fraudulently compare him to Reagan and while fraudulently quoting and framing the Gipper. I’m certainly not going let up as long as that crap continues, especially because the contrast in what matters — i.e., results — is so stark.

The graphic shows that the during the first two years after the 1980s recession, the economy under Reagan expanded by almost 13%. If today’s second quarter GDP report from Uncle Sam’s Bureau of Economic Analysis shows growth at an annualized 1.5%, the economy during the first two post-recession years under Obama will have expanded by 5.3%, or barely 40% of the Reagan Era performance. The differential in the past four quarters has been even greater: 6.9% to 2.2%.

I say “has reportedly happened” about the current era’s numbers because today’s GDP report, in addition to revealing the government’s advance estimate of how much the economy grew during the second quarter, will also revise reported growth figures going all the way back to 2003. That should be interesting. The pre-revision figures going all the way back to 1980 are here.

It could provide a measure of revenge for those who insist that the recession really began in December of 2007 if the numbers for the first two quarters of 2008, currently at -0.7% and +0.6%, respectively, both go negative. But as long as they don’t go significantly negative, it will still be the case that a serious recession didn’t begin until the third quarter, the first full quarter of the POR (Pelosi-Obama-Reid) Economy, which actually began in late May or early June of 2008. It will also be interesting to see if the four quarters of POR Economy’s deep recession end up even worse than they already are, or just slightly less awful (3Q08, -4.0%; 4Q08, -6.8%; 1Q09, -4.9%; 2Q09, -0.7%), or, conceivably, if the second quarter of 2009 might have snuck into positive territory (which would have stunning implications).

As to second-quarter predictions:

  • Yesterday, the Associated Press’s 9:32 a.m. report on unemployment claims carried a prediction of an annualized 1.7%.
  • A couple of weeks ago, Goldman Sachs downgraded its second quarter prediction to an annualized 1.5%.
  • A group of “IFR” economists thinks we’ll see 2.3%, according to a video posted at Reuters.
  • At the Washington Post, Neil Irwin writes that Bloomberg’s consensus is 1.8%.

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

8:35 a.m.I have an email saying that the number is 1.3%. I don’t see the announcement yet, but it may be my browser cache getting temperamental.

8:38 a.m. — Just opened a different browser program, and learned that the BEA server is overloaded.

8:41 p.m. — Ah, there it is (release; full text and tables), with a really, really big opening shock:

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 1.3 percent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.4 percent.

Boy, talk about “unexpectedly.” The 2003-forward revision I mentioned above just trashed the first quarter. Before the release, I meant to write that today’s report, if it disappointed, might have an impact on the direction of the debt-ceiling negotiations. They should, back in the direction of Cut, Cap, and Balance. They also give rumblin’-stumblin’-bumblin’-fumblin’ John Boehner a chance for a new determined start. Don’t blow it, John; this may be your last shot.

I’ll have much more later after reviewing today’s report and the comprehensive revision.

But for now, I can’t resist some snark: This isn’t anything a whole bunch of new tax increases can’t cure. (/sarc)

9:25 a.m.: Additional info will be in a new post (or posts) which is/are in the works. New post: “Today’s GDP Headline Should Be: Economy Has STILL Not Fully Recovered From Recession, No Matter How You Define It”

Latest Pajamas Media Column (‘Red States, Including the ‘Newly-Reds,’ Excel at Job Growth’) Is Up

Filed under: Economy,Taxes & Government — Tom @ 8:10 am

It’s here.

It will go up here at BizzyBlog on Sunday (link won’t work until then) after the blackout expires.

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The “newly-reds” are Ohio, Michigan, and Wisconsin.

This video from Ohio Governor Kasich tells more about the story of the Buckeye State.

Six words, guys: “Keep working hard,” and “Don’t get cocky.”

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UPDATE: A look at the top seven job gainers in absolute numbers in May and June combined is also instructive.

Here is the list of the seven:

Top7StateJobGainersMayJune2011

The three highlighted “newly-reds” added almost 32,000 jobs while the nation as a whole added 43,000 (yes, I know it’s not an apples-to-apples comparison, but it’s still useful).

Florida’s gain is one of the best in the nation even on a percentage basis during those two months. The Sunshine State didn’t get off to a great start this year, but a few more months like May and June, and perhaps Florida will become a fourth successful member of the “newly-reds.” Florida would qualify as a newly-red because previous governor and ultimate RINO Charlie Crist switched from Republican to Independent late last year in a vain attempt to derail Marco Rubio. New GOP Governor Rick Scott has been getting the Walker-Kasich treatment, and has a lot of damage to undo. Thank goodness that’s beginning to happen.

The other interesting list member is Minnesota. It looks like the state wasn’t particularly disturbed by the prospect of a state shutdown. With Democrat Governor Mark Dayton in place, it doesn’t qualify as a newly-red, but it appears that the GOP legislature in the Gopher State (add that to the “words I thought I’d never type” list) is doing its part to rein in the public sector at least a bit, and that it is reaping rewards for doing so.