September 27, 2011

NC Governor Perdue: ‘Suspend Elections to Congress for Two Years’; Raleigh Paper Insists It Was a ‘Joke’

NCgovPerdue0911Apparently there’s no audio or video of North Carolina Governor Beverly Perdue’s Tuesday humdinger, namely that “I think we ought to suspend, perhaps, elections for Congress for two years and just tell them we won’t hold it against them, whatever decisions they make, to just let them help this country recover.” — yet.

If none surfaces, that will be too bad, because the guess here is that the wiggle room desperate apparatchiks to North Carolina Governor Beverly Perdue and writer “jbfrank” at the Raleigh News & Observer are attempting to create — namely, that she was only joking — would vanish without a trace if we saw or heard how she delivered the following:

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DOL’s Negative 2010 Consumption Growth Contradicts Positive in GDP; AP Misses, Rest of Press Asleep (Is Last Year’s Reported Growth an Illusion?)

What if I told you that the government put out a report today which would lead one to infer that the economy might barely have grown last year, and that it even may have contracted — and that the reporter who appears to have been the only one who covered it didn’t grasp its potential significance (or, conceivably, chose to ignore it)?

Today the Department of Labor’s Bureau of Labor Statistics released its annual “Consumer Expenditures Survey” for 2010. As of 8:30 p.m., a Google News search on “consumer expenditures government” (not in quotes, past 24 hours, sorted by date, with duplicates) returned 72 items (the first page says over 2,400, but it’s really only 72). All relevant results represent Associated Press reports filed by Marting Crutsinger (Yahoo Finance version here).

Here are the key paragraphs from Crutsinger’s report which gave away the problem — or at least should have, if the AP reporter had made one obvious comparison:

Total spending by consumers fell 2 percent last year, according to the Labor Department’s annual survey of consumer behavior. It’s only the second decrease since the government began the survey in 1984. The first came in 2009.

Incomes declined 0.6 percent in 2010, after a 1.1 percent drop in 2009.

This year, consumer spending and income have increased only modestly. High unemployment, meager pay increases and a spike in gas prices have slowed both.

Weak consumer spending has held back the overall economy, which barely grew in the first half of the year. Consumer spending accounts for 70 percent of growth.

W-w-w-wait a minute, Marty.

Besides the technical error (Consumer spending accounts for 70% of the economy expressed as gross domestic product [GDP], not 70% of its growth), the significantly negative DOL percentage — which is before considering last year’s inflation of 1.6% — is the direct opposite of the positive “Personal consumption expenditures” component in reported GDP for 2010, as seen in this graphic from the government’s latest related release:

GDPtotalAndPCE2008to2010

Last year’s growth in consumption expenditures per the GDP report was 2%. DOL says the decline in average consumption per household was 2%.

Obviously, this isn’t an apples-to-apples comparison, but I believe that I have gotten most if not all the way to making one. The graphic below reflects the results of what I believe are the necessary adjustments for each year from 2005 through 2010, which include:

  • Aggregating the average household (“consumer unit”) data to arrive at total economywide consumer expenditures. Since the number of consumer units goes up by a bit each year, this would narrow the 2010 difference between the two data sources.
  • Subtracting out charitable contributions, which I believe are not considered part of personal consumption expenditures in the GDP report. Since charitable contributions have been trending downward, this adjustment would also narrow the 2010 difference.
  • Adjusting for inflation (GDP is expressed in real terms, and BLS’s report indicates that it does not adjust for inflation). With 2010 inflation being a positive number, this would significantly widen the 2010 difference.

Here are the results:

ConsumptionDOLvsGDP2005to2010

Readers can see that in every year from 2005 through 2009, the difference between consumption growth (or contraction) per GDP vs. DOL was within a “tolerable” range, with the biggest differential of 1.3% occurring in 2007. But in 2010, there’s a 5.2% difference — four times larger than the difference in any of the previous five years.

If DOL is right, one would expect that last year’s currently reported GDP growth will eventually disappear — and then some — in future revisions. If DOL is only half-right, i.e., if GDP has to come down by only half of the 5.2-point difference, overall GDP growth will eventually be darned near zero.

I haven’t see any indication that DOL adjusts their consumption numbers after-the-fact. On the other hand, the government adjusts GDP numbers several times before they’re considered final. There would appear to be more than a little reason to believe that by the time all of the adjusting is done, last year’s alleged “recovery” will officially no longer be one.

One advance indicator that such adjustments might be coming will appear on Thursday, when the Bureau of Labor Statistics, as announced in last month’s jobs report, is scheduled to publish the preliminary results of its “comprehensive benchmark adjustment.” If it finds that hundreds of thousands of jobs originally thought to have been created in 2010 really weren’t — as has been the case in three of the past four years — that will indicate that 2010′s reported GDP growth may eventually be heading down as well.

There may be perfectly acceptable reasons which explain both data sources are correct, but I don’t see what they could be. The amazing thing is how an AP reporter who has supposedly been immersed in business and economics reporting for years on a day-to-day basis could miss — or ignore — a discrepancy like this. It’s also more than a little surprising that from all appearances no other establishment press news source has dealt with the Labor Department’s report at all.

Cross-posted at NewsBusters.org.

As ‘Jobs Hard to Get Number’ Hits 28-Year High, AP Claims Consumers’ Related Feelings Are ‘Mixed Bag’

The Conference Board’s September Consumer Confidence Survey came out this morning. Overall, it rose very slightly from a miserable 45.2 to a still-miserable 45.4. Consumers’ assessment of near-term prospects slid from 34.3 to in August to 32.5, while their longer-term outlook improved from 52.4 to 54.0. (BizzyBlog Update: These two measurements will soon come to be known as the “Still Stuck with Obama” and “We Can’t Wait ‘Til Obama’s Gone” indicators.)

At the Associated Press (saved here for future reference, fair use and discussion purposes), Retail Writer Anne D’Innocenzio characterized the element of the report relating to jobs thusly:

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Solyndra Update: Make That $562 Million — And Where Most of the Money Probably Went)

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 10:48 am

solyndra_thumb_0From the LA Times, in a longer item about the eponymously named (in the circumstances) involvement of Obama fundraiser and Energy Department loan monitor (!) Steven Spinner in the administration’s “green energy” debacle:

Separately, lawmakers in Sacramento questioned a $27-million tax break given to Solyndra under a state law intended to encourage clean-energy companies to do business in California.

… The law, which was approved unanimously by the state Senate and Assembly and signed by then-Gov. Arnold Schwarzenegger in March 2010, exempts qualified clean-technology companies from paying sales tax when buying manufacturing equipment.

The law established a committee to review applications from companies that sought the tax breaks. In November, Solyndra applied for a credit that would allow it to avoid paying nearly $35 million in sales tax on the purchase of more than $380 million of equipment.

The request was granted, but the company used only $27 million of the credit before it went out of business, said Joe DeAnda, a Lockyer spokesman.

So now the tab is $562 million ($535 mil from Uncle Sam plus the $27 mil just noted).

At least it looks like we know where most of the $535 million borrowed under the loan guarantee went. $380 million for equipment seems like an incredibly inflated number in the circumstances.

Context: The estimated cost of Honda’s new plant in Greensburg, Indiana announced in 2006 was $550 million. That figure includes building and equipment for an entire automobile plant. Solyndra spent over two-thirds of what Honda spent just on equipment — for one solar panel plant.

I would suggest that someone needs to look into the pricing of that equipment, who the seller or sellers were, and whether the items involved were purchased in arm’s-length transactions. Only a fool would assume they were. Assuming the sellers were paid — a reasonably safe but not guaranteed assumption — “someone” did very well in the Solyndra deal.

The same goes for whoever built the gleaming, now-useless buildings.

I certainly understand why the FBI raided the place.

Off-Topic (Moderated) Open Thread (092711)

Filed under: General — Tom @ 9:35 am

Rules are here.

Granholm’s Grand Illusion

Filed under: Economy,Taxes & Government — Tom @ 9:30 am

When it comes to creating a growing, vibrant, prosperous economy, former Michigan Governor Jennifer Granholm and your friendly government know best. Really.

Never mind that Michigan became the nation’s economic basket case during her eight years in charge, which mercifully ended in January of this year.

In this morning’s the Wall Street Journal, William McGurn reviews the book this dangerously delusional woman has recently published (bolds are mine):

Once in a generation, a politician gives us failure and misunderstanding so colossal that his or her bad example rises to the level of public service.

To this elite few belongs Jennifer Granholm.

In the Michigan she governed for eight long years, the roll call of despair is not in dispute. On her watch, the state’s ranking in per capita GDP plummeted to 41st place from 24th, Detroit’s population shriveled to its lowest level since 1910, and Michigan earned the dubious distinction of being the only state to suffer a net out-migration this past decade.

… With this kind of record, most politicos might take refuge in prudence. Not Ms. Granholm. Today she is running around the nation selling a book and a message. The book is called “A Governor’s Story: The Fight for Jobs and America’s Economic Future.” Her message—that Granholm’s Michigan shows the way forward—has been taken seriously in all the places you might expect: the New York Times and Comedy Central’s “The Daily Show.”

… (in) her most infamous prediction … in 2006 she assured the people of Michigan this: “In five years, you’re going to be blown away by the strength and diversity of Michigan’s transformed economy.”

… Michiganders are still waiting.

… A year and a half before Americans learned about Solyndra, Gov. Granholm stood next to Flint businessman Richard Short at a press conference and declared that the $9.1 million in state tax credits that her government had awarded his renewable energy company would mean 765 jobs. The next day, Mr. Short was arrested.

Turns out Ms. Granholm’s people had not known that their champion of green jobs was a convicted felon out on parole.

In the end, Ms. Granholm’s argument is simply a form of the same economic narcissism that animates people who never lose the charming faith that they know best how to spend other people’s money.

… Yes, indeed. If you liked Gov. Granholm’s Michigan, you’ll love President Obama’s America.

Ms. Granholm loves her Wolverine State handiwork so much that … wait for it (links added by me) … “She and her husband have moved to Berkeley, where they are both teaching.”

Positivity: 7-year-old boy saves mom’s life with calm, cool and collected call to 911

Filed under: Positivity — Tom @ 8:59 am

From New York:

Thursday, September 22nd 2011, 4:00 AM

A quick-thinking Brooklyn boy was hailed as a hero Tuesday after he calmly phoned 911 when his sickly mother collapsed and started convulsing.

“She fell down. She’s shaking,” 7-year-old Drew Champagnie told a dispatcher at 8:12 a.m., a source said. “Please send someone quickly.”

With his mother writhing on the floor beside him, Drew coolly rattled off to the 911 operator his address and his father’s cell phone number.

“It’s not just, ‘Help! Help! Help!’” an FDNY source said. “It’s like, ‘Please get someone here.’ He had it together.”

Paramedics arrived at the Cypress Hills home minutes later and quickly went to work on Drew’s ailing mother, Doris Champagnie-Gilkes.

Champagnie-Gilkes, 47, was later listed in stable condition after undergoing a battery of tests at Kings County Hospital.

“Mom is doing well,” an FDNY source said. “She’s expected to be okay.”

In a bedside interview, Champagnie-Gilkes appeared slightly dazed, but her eyes came to life when asked about her son.

“He’s awesome, a beautiful boy,” said Champagnie-Gilkes, who suffers from high blood pressure, diabetes and seizures. “He’s always looking out for me.”

After his act of bravery, Drew went to school as if nothing had happened.

He returned home to a horde of waiting reporters and photographers.

“I’m not scared,” Drew said. “I know what to do.”

Drew said his mother was helping him get dressed for school when she started suffering a seizure.

“She was shaking, and she fell sideways,” Drew said.

“I went downstairs and got the phone and called 911. I told them that my mom is sick and come as fast as you can.”

“When the ambulance came, I let them in,” Drew added.

The precocious boy said his grandmother and uncle, a city paramedic, taught him what to do in case his mom starts having a seizure.

Go here for the rest of the story.