July 6, 2011

Graph of the Day: What Recovery?

Filed under: Economy,Quotes, Etc. of the Day,Taxes & Government — Tom @ 5:50 pm

Or, as I’ve been saying for 18 months: “Rebound? What Rebound?

From SOBer Alo at Brain Shavings, with appropriate embedded editorial commentary:

non-recovery

If I had designed it (which I didn’t; the Minneapolis Fed did), I would have started the current graph at June 2008 instead of December 2007 to reflect when the recession as normal people define it and the POR (Pelosi-Obama-Reid) Economy began.

The first six months of the “recession” as drawn up above are historically mild, and there’s no reason why the real recession which followed had to be as severe as it was. But, as I said in my most recent Pajamas Media column, “Revisionomics“:

… in the five months or so leading up to the 2008 presidential election, Pelosi, Obama and Reid deliberately frightened the economy’s key players with promises of steep tax increases, wealth redistribution, government control of medicine, punitive regulation, and energy starvation.

The rest is history. As BizzyBlog commenter “JoeC” told us four years ago (with a bit of paraphrasing by yours truly), it’s a vivid illustration of “The Democrat Effect: the rational response by entrepreneurs, businesspeople, and investors to imminent or already present excessive government intervention, overbearing regulation, crippling litigation, and taxation, all of which seriously curtail economic activity.”

Those in the administration and the establishment press (but I repeat myself) who try to deny that the economy is worse now than when Barack Obama was inaugurated are essentially saying that the red line’s Month 41 is better than its Month 13. They are willfully blind in one eye and deliberately won’t see out of the other. As contributors to a meaningful debate about solution or providers of information, they are useless.

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UPDATE, July 9: At the Economic Collapse Blog — “Rampant Unemployment = The Death Of The Middle Class – 40 Facts That Prove The Working Class Is Being Systematically Wiped Out.”

Quote of the Day: Rush, On Mitt Romney

Filed under: Economy,Quotes, Etc. of the Day,Taxes & Government — Tom @ 1:39 pm

Just heard Rush say it, so there won’t be a link until this evening — and there may not be one at all, depending on what Rush chooses to post from his program.

The statement:

“… Romney is running against the Tea Party.”

What took you so long, good buddy?

_________________________________

UPDATE, 6:30 p.m.: Here’s the relevant portion of the transcript (link will become inaccessible without a subscription in a week) –

RUSH: Here’s Romney, by the way. I want you to hear this. This is yesterday in Wolfeboro, New Hampshire. I referred to this remark that Romney made in the previous hour of the program.

ROMNEY: Unions have played a very important role historically in balancing, in some cases, the egregious actions of some employers and — and have been important to the development of our economy. And there are some unions that continue to — to train their workers effectively, their union members effectively.

RUSH: This is salient. This is the leading Republican presidential nominee seemingly every day adopting a policy from the Democrat Party or espousing a belief that is designed to siphon votes from the Democrats. “Hey, hey, I’m not one of these Neanderthal Republican conservatives; I like unions, I like you people.” So it’s clear to me that Romney is running against the Tea Party. I don’t know any other Republican saying this. If a couple others join him here, I won’t be surprised, given who they are, but I’m not gonna predict it. I’ll wait for it to happen.

What Romney says is true, but as Rush points out, it’s irrelevant to running for the Republican presidential nomination — unless your goal is to get it and then run to the supposedly magic middle while abandoning the base. Free market-believing union members will support Republicans; the portion of union leadership which is thuggish never will. Public-sector union members who figure out that they still have their jobs because their state governments took needed actions to preserve them will support Republicans; their leaders, who prefer layoffs of less senior members over realistic ramp-backs of employee costs, never will.

GOP Presidential Candidate Intensity Update

Filed under: Taxes & Government — Tom @ 12:38 pm

Here’s the graphic published by Gallup yesterday:

3wxic3o8-0m_wrlhj41rsq

Ignoring the four paragraphs Gallup wasted on analyzing Huntsman, here’s the relevant verbiage from its related post:

Michele Bachmann’s Positive Intensity Score in this week’s report has settled down to 20 from 24 last week, but this is still the second-highest such score of any Republican measured, behind only Herman Cain at 26. Palin, at 18, and Romney, at 14, trail Cain and Bachmann.

Bachmann’s name recognition is now at 74%, up 22 percentage points from early March. Bachmann is now essentially as well-known as Ron Paul; these two sitting U.S. representatives trail only Romney, Gingrich, and Palin in terms of their recognition among Republicans.

There has been little change in the positioning of Pawlenty, Santorum, or Paul. Paul is the best known of these, while Santorum is the least well known. All three have nearly identical Positive Intensity Scores in the 9 to 10 range, roughly where they have been for weeks.

The image of former Speaker of the House Gingrich among Republicans nationwide is now the worst of any candidate tested.

Overall, two GOP presidential candidates continue to generate the most enthusiastic response from Republicans nationwide — Cain and Bachmann. Both, however, trailed Romney when Republicans were last asked to name their current preference for the Republican nominee, based in part on Romney’s higher name identification.

The Positive Intensity Score for unannounced candidate Palin is the third highest, also ahead of that for Romney. Romney’s score has fluctuated somewhat in 2011; it reached a high of 20 earlier this year and was at 19 just three weeks ago, but is now down to his lowest since late May.

The details for the four leading contenders/potential contenders, where they can be calculated:

  • Bachmann — 74% name recognition times 27% net favorables (strong favorables less strong unfavorables) equals 20 Intensity.
  • Palin — 95% name recognition (*) times 19% net favorables equals 18 Intensity.
  • Romney — 84% name recognition (*) times 17% net favorables equals 14 Intensity.
  • Cain — 26 Intensity; Gallup didn’t provide enough info to calculate.

(*) – Gallup did not supply a current figure, so I used the one from three weeks ago, which couldn’t have changed by much.

Paul (Intensity stuck at 8), Pawlenty (Intensity dropped from 11 to 10), and Santorum (Intensity went from 9 to 10) are totally not moving the needle.

Given that Cain’s intensity was 28 three weeks ago, it would appear that his name recognition barely budged, and that his net favorables — well into the 60%-plus range (as calculated at yesterday’s related post on the previous version of this poll), though still miles above any other candidate, dropped a bit (it could be that his awareness picked up and that his net favorables dropped, but I don’t see any impactful news item or event which would have caused this to happen). My take is that Cain’s not making himself known, or at the very least not doing it fast enough.

ISM Non Manufacturing Index: Down 1.3 points to 53.3%

Filed under: Economy — Tom @ 10:38 am

From the Institute for Supply Management:

Economic activity in the non-manufacturing sector grew in June for the 19th consecutive month, say the nation’s purchasing and supply executives …

“The NMI registered 53.3 percent in June, 1.3 percentage points lower than the 54.6 percent registered in May, and indicating continued growth at a slower rate in the non-manufacturing sector. …”

This isn’t particularly bad news (anything above 50% means expansion), but it’s a definite sentiment indicator that whatever expansion we have is slowing (the March value was 57.7%). This is too bad, because the expansion wasn’t much of an expansion in the first place, at least in terms of generating acceptable GDP growth.

I think we’ll be lucky if today’s number holds steady in the coming months.

Revisionomics

obama_unexpectedly_thumbnailUnder Obama, “unexpectedly bad” ends up being “much worse.”

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

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On June 23, longtime business reporter Felicia Taylor at CNN interviewed several people with possibly better abilities to see the future than the analysts and economists on whom the establishment press normally relies: psychics. Seriously.

While misguided, I can understand why Ms. Taylor felt the need to seek alternative economic forecasting. It must be really frustrating to place trust in a bunch of alleged smarties who routinely churn out predictions that are consistently and predictably — but somehow “unexpectedly” — wrong.

There’s little doubt that journalists are getting a bit touchy about using “the U-word,” especially since, far more often than not during the past several years, it has meant “unexpectedly bad.” On June 28, in the wake of yet another downward slide in consumer confidence after “experts” had predicted improvement, both Bloomberg and the Associated Press let the U-word slip into their initial reports but purged it in later revisions.

Speaking of revisions, most Americans are probably unaware of what has happened to initial government data since Democrats took control of Congress in 2007. In revisions over the following months and years, already “unexpectedly” bad results have almost invariably gotten worse — often much worse. This situation began to go code red (or really “code blue”) once the POR (Pelosi-Obama-Reid) Economy and the recession as normal people define it kicked in three years ago.

Take economic growth. As seen below (full details here), in the 17 quarters starting in 2007, the decline between the Bureau of Economic Analysis’s advance estimates of annualized growth in the nation’s gross domestic product (GDP) and the revised figures currently at the BEA’s web site has averaged 0.58 points:

2007to2010and2003to2006InitVsFinalGDPgrowth

That may not seem like much, but the average growth currently reported during those 17 quarters (0.73%) is 44% lower than the average of the initial reports (1.31%). In the third and fourth quarters of 2008, the first two quarters of the real recession, opening GDP contraction estimates of -0.3% and -3.8%, respectively, cratered to -4.0% and -6.8% after revisions. Sure, the economy was much worse than Pelosi, Obama, Reid and the Democrats thought, but as I have previously shown, they’re the ones who caused it to turn out that way. By comparison, currently recorded average annualized quarterly GDP growth during the Bush 43 years of 2003 through 2006 is only 9% lower (3.02%) than what was originally reported (3.31%).

How about jobs? Brace yourself (details: 2007-2010; 2003-2006) –

2007to2010and2003to2006InitVsFinalJobGrowth

From 2007 to 2010, initial reports from the Bureau of Labor Statistics (BLS) told us that the economy lost 4.201 million jobs. BLS revisions have thus far ramped up the number of jobs lost by 2.43 million. The four-year total is now 6.631 million — a stunning 58% increase. As seen above, the bureau’s revisions to the 12 months of the real recession (July 2008 through June 2009) have shot reported job losses up by almost 1.9 million, a jaw-dropping average of 158,000 per month.

They’re not done yet. Every February, BLS performs a comprehensive “benchmark revision.” The next one will affect the period from March 2010 through December 2011. Based on the results of the past four years showing average additional job losses of 415,000, the next benchmark revision seems destined to push the figures even higher.

By contrast, from 2003 to 2006, initial BLS reports told us that the economy added 5.103 million jobs. After all revisions, the four-year total rose by 1.605 million to 6.708 million — a 31% increase. The sum of all benchmark revisions during that time was a positive 675,000.

Why did the revised data largely improve (or at least decline very little) from 2003 through 2006, while decaying horribly since 2007? Frequent BizzyBlog commenter “JoeC” formulated the foundation of the negative side of what I call “revisionomics” almost four years ago, and worked up the positive side earlier this year. Paraphrased a bit, they are as follows:

  • First, there’s “The Democrat Effect,” which is “the rational response by entrepreneurs, businesspeople, and investors to imminent or already present excessive government intervention, overbearing regulation, crippling litigation, and taxation, all of which seriously curtail economic activity to a greater extent than initially estimated.” When Democrats took full control of Congress in January 2007, initially reported economic news started to come in “unexpectedly” bad, and took serious turns for the worse when revised. Then, in the five months or so leading up to the 2008 presidential election, Pelosi, Obama and Reid deliberately frightened the economy’s key players with promises of steep tax increases, wealth redistribution, government control of medicine, punitive regulation, and energy starvation. This led to the almost unimaginable recessionary data declines described above. Perhaps Bush 43 could have done something to stop the madness; sadly, he really didn’t even try.
  • For what should be obvious reasons, the flip side of The Democrat Effect is not called “The Republican Effect.” Its proper name is “The Conservative Effect,” which is “the rational response by entrepreneurs, businesspeople, and investors when The Democrat Effect has either ended or is sufficiently reined in, enabling a reasonable level of free-market activity to occur, and causing the economy to perform better than initially estimated.” From 2003 until 2006, the Bush administration’s across-the-board income and investment-related tax cuts enabled The Conservative Effect to take hold in the job market, where initial results routinely and “unexpectedly” beat predictions, and subsequent revisions moved the numbers further upward. Unfortunately, the millions of hours of busywork caused by Sarbanes Oxley, as well as the onerous costs the law added to going public — which caused and continues to cause growing firms which might have gone public in the U.S. before the law’s passage to either decide against it or to do so overseas – kept GDP growth, which could have been at least as strong as the late 1990s, at a mostly mediocre level.

Though they should, economic forecasters don’t take the Democrat or Conservative Effect, whichever happens to be in force, into account when formulating their predictions. As long as this remains the case, and as long as the Obama administration stays on its current course of reckless spending, regulatory tyranny, and childish insistence on tax increases that will self-evidently make things worse, one does not need to possess psychic powers to know that we can count on “unexpectedly” bad economic news followed by additional, steep downward revisions.

IBD Calls for a Probe of a Probe

Filed under: Economy,Scams,Taxes & Government — Tom @ 8:59 am

This administration brings corruption and conflict of interest to a whole new level.

The background is that Harry Reid, who “just happens” to support a different Democrat for U.S. Senate in Nevada in 2012, said, according to Hotline on Call (Item 5 at link) that “he regretted placing (Byron) Georgiou on the Financial Crisis Inquiry Commission two years ago. Reid said he was misled about charging he was misled about Georgiou’s credentials.”

Two points:

  • Reid placed a guy on the FCIC who was clearly conflicted, and was in a position to affects its conclusions, which laughably placed the blame on “Wall Street.
  • Reid’s concerns about the blowback from publicly admitting that the FCIC was tainted must be minimal; he “regrets” Georgiou’s FCIC appointment like a cat “regrets” having eaten the canary. His primary (pun intended) concern is keeping Georgiou away from the U.S. Senate, and if that means airing his party’s FCIC corruption, well, who’s going to care about that at this point?

At an Investors Business Daily editorial Tuesday evening, the paper’s editorialists properly emphasized how unreliable the FCIC’s conclusions really are (bolds are mine):

The corrupt process by which the Democrat-appointed Financial Crisis Inquiry Commission was formed and ran its “investigation” is finally getting press.

In an extraordinary development, Senate Majority Leader Harry Reid now says he regrets naming fellow Democrat Byron Georgiou to the commission because of “ethical concerns” first raised by this paper regarding Georgiou’s tenure at the FCIC.

“I wish I hadn’t done it,” Reid said.

The sudden renouncement casts doubt not only over Georgiou’s credentials, but also the FCIC’s findings, which were released in its final report in January. The panel pinned the mortgage mess on Wall Street.

The Senate majority leader complained that Georgiou, one of six Democrats appointed to the 10-member panel, misled him about his affiliations. Reid now claims Georgiou never made his employment with a major securities litigator known to him prior to his appointment. Georgiou works for Robbins Geller Rudman & Dowd, which represents several pension funds suing Goldman Sachs and other banks demonized by the FCIC. The commission’s chief investigator, Chris Seefer, also happens to be a partner at Robbins Geller.

As first reported by IBD, Georgiou spoke at a closed-door conference for pension fund lawyers hosted by Robbins Geller while he was still serving on the commission. He was joined by FCIC chairman Phil Angelides. The commissioners promised to privately share their findings with the group, according to a conference brochure.

Reid’s claims of ignorance strain credulity. The 2009 congressional press release announcing Reid’s appointments to the FCIC clearly states … “”Since 2000, Mr. Georgiou has been affiliated of counsel to the national law firm of Coughlin Stoia Geller Rudman & Robbins, the world’s largest plaintiffs securities practice ….”

… The potential conflict could not have been clearer to Reid. To say he’s shocked is disingenuous at best.

… Democrats might have overplayed their hand in trying to mislead the public about their role in the financial crisis. With even the Senate majority leader questioning the vetting of FCIC commissioners, the Senate should join the House in investigating the FCIC probe.

Around here from now on, it’s the “hopelessly corrupt, compromised and worthless FCIC.”

Positivity: A Remarkable Rescue

Filed under: Positivity — Tom @ 5:58 am

From Australia:

Posted on June 29, 2011, 8:08am

Two men have been lucky to survive nearly four hours in icy waters after their boat capsized off the coast of Port MacDonnell on Saturday afternoon.

The two Geelong men, both aged in their 50s, were rescued 14km off the coast of Port MacDonnell after a wave swamped their five-metre vessel.

Miraculously, the men managed to dive under the capsized boat and recover an emergency beacon before clinging to the vessel.

The pair were able to transmit an emergency message to Australia Search and Rescue (AusSar) services in Canberra, which in turn alerted emergency services in South Australia.

However, the vessel sank shortly after the signal was sent, leaving both men in the freezing water as it became dark.

Emergency services dispatched a rescue helicopter from Warrnambool as well as two aircraft, including an AusSar search and rescue plane from Tasmania.

But it was the actions of two Port MacDonnell men and their crayfish vessel “The Remarkable” that saved the men’s lives.

After three and a half hours, helicopter crews spotted the flashing beacon in the ocean and directed the Port MacDonnell vessel to the men’s location.

They were pulled from the water onto the boat suffering from prolonged exposure to the cold and hypothermia.

The men were taken to Mount Gambier Hospital, where they stayed over night before making a full recovery.

They were later discharged on Sunday afternoon.

Limestone Coast Superintendent Trevor Twilley praised the two-man crew of the fishing boat, saying the rescue vessel had lived up to its name.

“Had it had not been for the vessel Remarkable having gone out to assist us in our coordination of the search, then it’s quite likely that they may not have survived,” he said. …

Go here for the rest of the story.

On the Economy’s Condition As Worse Than When Obama’s Term Began, Mitt Romney Is (or Was) Right

On Friday, at its Political Hotsheet, Corbett B. Daly at CBS News, who joined the network in late May after leaving Reuters, appeared to virtually celebrate what he believes was the latest of Mitt Romney’s flip-flops.

Though it’s clear that Mr. Romney has flip-flopped in the past on a number of matters, it’s hard to see how Daly or any of the other flip-flop scorekeepers has a case — at least before Romney appeared to give in to the media meme.

Here is how Daly characterized it, complete with the presumption that what Romney has been saying on the campaign trail is “factually inaccurate”:

Romney flip-flops on charges against Obama

Former Massachusetts Governor Mitt Romney on Thursday backtracked on a central theme of his presidential campaign: that President Obama has made a struggling U.S. economy even worse.

“I didn’t say that things are worse,” Romney said at a press conference in Allentown, Pennsylvania.

The comments came in response to a question from an NBC producer who asked the putative front-runner for the Republican nomination to explain his factually inaccurate statements on the campaign trail about the struggling U.S. economy.

During last month’s Republican debate in New Hampshire, Romney said Mr. Obama “didn’t create the recession, but he made it worse and longer.”

… Economic growth is considered by economists to be the best overall measure of the economy’s performance, and the data clearly show a fragile economy that was falling off a cliff a couple years ago. In the last three months of 2008, just before Mr. Obama took office, the U.S. economy contracted at a 6.8 percent annualized pace, according to the Commerce Department.

… And job growth, which is even more important for most voters, shows a similar story: weak but better than it was. The economy lost 820,000 jobs in January 2009 and continued to lose jobs every month through early 2010. Job creation in mid-2010 see-sawed between growth and loss until October, when there were 171,000 jobs created. The economy has added at least some jobs every month since, though just 54,000 jobs were added in May, the most recent month for which data is available.

Center-right blogger Ace makes two arguments about the economy. I agree with the first, but the facts refute the second:

  1. Did Obama make the recession worse than it otherwise would have been? Romney’s answer, as well as every Republican’s answer (pretty much) is “Yes.”
  2. Is the economy currently worse than it was in January 2009, when Obama took office? His answer is “I didn’t say that.” It would be hard to make this case, and few do.

What no one — Romney, Ace, or Daly — seems to get is that whether something is “worse” depends on two snapshots — One as of January 2009, and another based on the latest data available (March, May or June 2011) plus, where needed and where possible, short-period projections to sync everything to the end of June. The supposed trajectory of the economy at the time of those snapshots is totally irrelevant to the Better/Worse evaluation.

The two key components of the snapshot involve the employment situation and economic growth.

The employment situation can be broken down into three key elements: unemployment, the unemployment rate, and the number of jobholders. Here are the figures for each element, pending revisions (which, as shown in my column yesterday, are can reasonably be predicted to make 2010 and 2011 job-holding figures even further):

EmploymentDataEstdAt063011.png

This is tough for media types to understand, so I’ll lay it out, piece by piece (all figures are seasonally adjusted):

  • The first table, the one with the red boxes, shows how many people weren’t working, based on the monthly “Household Survey” done the the government’s Bureau of Labor Statistics. As of  January 2009, that number was 11.984 million. As of May 2011 (there is no June estimate, since forecasters typically don’t predict this value), that number was 13.914 million. 1.93 million more people were unemployed in May 2011 than were unemployed in January 2009. Regardless of the upward or downward trajectory as of the respective time periods (and the number of unemployed increased in April and May), unemployment is 16% worse now (1.93 million divided by 11.984 million) than it was 29 months ago.
  • The second table, the one with green boxes, shows the unemployment rate, which is also based on the Household Survey. As of  January 2009, it was 7.8%. The current estimate for June, according to Forecasts.org, is that the rate will come in at 9.0% when BLS releases its official report for June on Friday, July 8. June’s predicted unemployment rate is 1.2 points higher than the unemployment rate as of January 2009. By this second measurement, unemployment is 15%  worse now (1.2 points divided by 7.8 points) than it was 29 months ago — even before considering other alternative measurements; the so-called “U-6 unemployment rate” was 14.1% in January 2009, and 15.8% as of May 2011.
  • The third table, the one with blue boxes, shows the number of employed based on the BLS’s “Establishment Survey” of employers. As of  January 2009, total employment was 133.563 million. The current estimate for June, again per Forecasts.org, is that the number will rise by 130,000 from May’s to a total of 131.173 million in Friday’s BLS report. June’s predicted figure is 2.39 million, or 1.8%, lower than the number of people who were working in January 2009. If employment had actually grown in proportion to the civilian population in the past 2-1/2 years, 136.17 million would be working. 5 million fewer (3.96%) really are. Employment is worse now than it was 29 months ago. As demonstrated in my Pajamas Media column posted yesterday, the odds are pretty high that the figures from the past year or so will be revised further downward when the BLS releases its “comprehensive benchmark revision” early next year.

From all three different angles, it’s indisputably clear that the employment situation is worse now than it was 29 months ago — much worse. It is so far away from getting back to where it was in January 2009 that it’s not even worth trying to guess how long it will take to get back to where it was in January 2009.

Now let’s look at economic growth, which is Daly’s primary argument. It’s not that impressive, and in no way makes up for the far worse employment situation.

As seen below, including a rough estimate of 2% annualized GDP growth for the second quarter of 2011, real GDP is up by a bit less than 4% — but per-capita GDP is only up by 2% (source data):

GDPandPerCapitaGDP4Q08to2Q11

So, after considering civilian population growth, employment is a painful 4% worse. Also, after considering population growth, GDP is only 2% better. If you give each factor equal weight (why wouldn’t you?), the economy is 2% worse almost 2-1/2 years after Barack Obama’s term as president began. And this is all before considering the frightening and potentially economy-crippling debt overhang and unprecedented deficits as far as the eye can see that Obama’s stimulus and other programs largely created, which would obviously move the meter even further in the “worse” direction.

What was that you were saying about “factually inaccurate,” Corbett Daly?

Cross-posted at NewsBusters.org.