July 31, 2013

NewsBusted (073013)

Filed under: NewsBusted — Tom @ 6:52 pm

Here we go:

Topics:
– Detroit Bankruptcy
– President Obama
– George Zimmerman
– Obamacare
– Prince George
– New York Times
– Anthony Weiner
– MSNBC Melissa Harris-Perry
– Bette Midler

Best Line: “Bette Midler tweeted that Republicans did everything they could to make America lose World War II. And Midler also claims that the Pilgrims came over on the space shuttle.”

Ohio, 7th in spending growth last decade, has gone back to binging

Filed under: Economy,Ohio Economy,Ohio Politics,Taxes & Government — Tom @ 6:39 pm

After a 2-1/2 hiatus, the Buckeye State has relapsed.

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This column went up at Watchdog.org with minor edits a short time ago.

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Spending in Ohio is surging … again.

Direct spending in the Buckeye State grew, per capita, by 41.7 percent during the 10 fiscal years that ended in mid-2011, the Washington-based Tax Foundationa non-partisan tax research group, showed.

It marked the seventh-highest growth percentage in the nation.

Every one of Ohio’s neighboring states had lower spending growth. Only Pennsylvania’s 40.4 percent came close. The others: Indiana, 32.4 percent; Michigan, 21.5 percent; West Virginia, 14.2 percent; and Kentucky, 29.9 percent.

Ohio’s previous-decade spending binge was a bipartisan affair, first pushed by Republican Gov. Bob Taft and a GOP-dominated General Assembly. The strong economy before the turn of the century and the growth in state tax collections that accompanied it allowed Taft and lawmakers to become complacent, to believe they could put spending increases on virtual autopilot.
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‘If You Fund It, You Own It’

Filed under: Health Care,Life-Based News,Taxes & Government — Tom @ 5:33 pm

This advocacy ad (HT CNS News) is directed at Mitch McConnell, but there could and should be a version directed at John “the Facilitator” Boehner:

2Q13 GDP Growth (073113): An Annualized 1.7%, Up from Revised 1.1% in First Quarter; See Updates

Filed under: Economy,Taxes & Government — Tom @ 7:41 am

Note: I won’t be reacting to the GDP report until sometime after 9 a.m. because I will be on the ADP Jobs Report conference call.

Additional topside note: The GDP revision today, done once every five years, goes all the way to 1929. Obviously there’s a lot to review.

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Predictions:

  • Reuters“Gross domestic product probably grew at a 1.0 percent annual rate after expanding at a 1.8 percent pace in the first quarter because government austerity and weak global demand weighed on the economy, according to a Reuters poll of economists. But there is a risk that growth undershoots expectations, with forecasts as low as a 0.4 percent rate.”
  • McClatchy — “Most mainstream economic forecasters expect a growth rate from April to June well below 2 percent, with the most optimistic in the 1.5 percent range and the more pessimistic in the range of 0.5 percent. … It’s why President Barack Obama has given four speeches in the past week talking up the economy.”
  • Associated Press (covered here last night; “Economy tepid in second quarter but will expand rapidly, economists predict” — “Economists forecast that growth slowed in the April-June quarter to a seasonally adjusted annual rate of just 1 percent, according to a survey by FactSet.”
  • Business Insider — “expected to come in  at +1.0% compared with +1.8% in Q1. Lots of analysts are saying there’s a strong chance it’ll be on the bearish end of the 0.4% to 2.0% range noted by Econoday, in part as a result of sequestration.” Zheesh.

Comments:

  • There will be a comprehensive revision of the past several years of GDP data. Their overall direction will tell us whether the past few years has been almost as bad as we thought or even worse.
  • One figure almost no one looked at last month was the outsized contribution of a buildup in farm inventories, a puny element that somehow added 0.83 points of GDP out 1.8 in total. If that reverses itself in today’s report, there could be a significant “unexpected” surprise — unexpected to everyone except readers here.

HERE WE GO (full release): A better than expected 2nd quarter, offset by a much worse first quarter

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 1.7 percent in the second quarter of 2013 (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 1.1 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the second quarter, based on more complete data, will be released on August 29, 2013.

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, private inventory investment, and residential investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The 2Q beat vs. expectations (+0.7%) is the same as the 1Q writedown (-0.7%).

A really quick look at the more recent revised numbers shows a few interesting items:

  • 4Q12 growth was only an annualized 0.1%.
  • 1Q11 had a contraction of 1.3% (i.e., we were at the edge of a double-dip recession, though the preceding and subsequent quarters were +2.8% and +3.2%, respectively).
  • The second quarter of 2008 went to a positive 2.0%, further supporting the notion that the National Bureau of Economic Research blew the call when it said that the recession started in December 2007. It really started by the NBER’s own measurement guidelines in June 2008.
  • Last year’s GDP growth was written up to 2.8% from 2.2%, and is entirely due to 1Q12 being revised up from 2.0% to 3.7%, more than offsetting smaller writedowns in the other three quarters.
  • Zero Hedge notes that because of all of the revisions, the economy (as of 1Q13) just got $550 billion (3.4%) bigger ($16.535 trillion instead of $15.984 trillion). Immediate reax: I wonder how much of that is from 2Q08 and earlier?
  • Zero Hedge notes that after today’s comprehensive revision, the 1Q13 miss vs. expectations was the worst in 27 months.

As to the current quarter:

  • That farm inventories number, revised to contributing 0.88 points to the first quarter (meaning that all other factors only accounted for 0.22 points — yikes), came in positive (+0.13) this quarter. The guess here is that it won’t hold up in revisions and will go negative.
  • The “government spending cuts ate my GDP” excuse (only a -0.08-point impact) is gone.
  • The biggest negative influence, offsetting a few positives like fixed investment (from -.023 points last quarter to +0.93 points in the second quarter) was in imports and exports. While exports went from -0.10 points in the first quarter to +0.71 points in the second, imports went from a -0.10-point impact to -1.51 points (meaning that imports increased substantially). I would think/hope that this hugely negative number gets reduced in future revisions.

Overall, though it’s clearly not an acceptable result, the second quarter at least had some hints of building strength in areas that matter to genuine long-term economic improvement (i.e., fixed investment). But we really won’t know until we see what happens with imports, that pesky farm inventory change, and a pretty weak personal consumption element (only 1.22-point contribution) in future revisions.

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UPDATE: Seems a bit strong, but here it is from John Makin at AEI — “2Q growth numbers indicate a US recession is on the way”

UPDATE 2:Goldman: ‘We Expect A Downward Revision To The Fed’s 2013 Growth Forecast’”

UPDATE 3: Intriguing question for which the answer will have to wait — How much of the 3.4% writeup of GDP can be traced to the God-awful Bush 43 years? As noted in the comments, NONE of it can be traced to the Obama years.

ADP July National Employment Report: +200K Private Sector Jobs, June Revised Up 10K to 198K; See Conference Call Notes

Filed under: Economy — Tom @ 7:40 am

June’s ADP report came in at 188,000 private-sector jobs added. Predictions for July are:

The report will be here at 8:15 a.m. I will live-blog ADP’s 8:30 a.m. conference call. I would think that Mark Zandi is also going to talk a little bit about GDP on that call.

Here we go (direct link):

Private-sector employment increased by 200,000 from June to July, on a seasonally adjusted basis.

Highlights:
- Small businesses (1-49 employees) +82,000
- Medium businesses (50-499 employees) +60,000
- Large businesses (500 or more employees) +57,000

June was revised up by 10,000 to 198,000.

More, from the press release (may load slowly):

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains remarkably stable. Businesses are adding to payrolls in most industries and across all company sizes. The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts. This bodes well for the next year when those headwinds are set to fade.”

CONFERENCE CALL NOTES coming up, starting at 8:30 (my spur-of-moment thoughts in italics):

MARK ZANDI: Very consistent with job growth in past 36 months averaging 200K/month.

Broad-based across most industries, with weakness in mfg. due to cuts in defense outlays relating to sequestration and weakness in exports.

Solid gain in construction (over 20K). Also strong in companies of various sizes.

No significant evidence of health care reform impact, (evidence “evaporated” in the summer), or that bizzes are moving people from FT to PT. PT pickup is only evidence of volatility not of significant pickup.

Job growth is skewed to lower-wage jobs. Leisure and hospitality, retail, and professional services. 60% of job growth since early 2010 has been in the low wage category, bottom one-third of pay scale. Job growth very weak in middle-paying jobs (mfg and govt).

Not unusual to see this weighting early in a recovery. (EARLY???)

Sequestration is having an impact, most pronounced in defense outlays.

Still thinks Fed will start tapering in September, consistent with the script laid out in past few months.

Quite impressive in the context of the fiscal drag and other headwinds.

Q&A session —

Professional and biz services (+49K) (remember, that includes temps) is more consistent with what BLS has been reporting. It’s a melange of many disparate industries. Fair to say that in general it’s a sign of strength that this sector has strong job growth. Many areas with prof services are not that great in productivity, possibly explaining why GDP growth is weak vs. employment growth.

Doesn’t think employer mandate delay in Obamacare is affecting things yet. Hard to conclude that there’s any meaningful impact on job market of health care reform (but what about what employers haven’t done to grow their businesses?), despite business complaints. Doesn’t expect to see any Ocare impact for the rest of the year. Has been looking for it, and it’s not in the data.

Zero Hedge also believes that a number like this confirms that the Fed will start to taper.

Wednesday Off-Topic (Moderated) Open Thread (073113)

Filed under: Lucid Links — Tom @ 6:05 am

This open thread will stay at or near the top today. Rules are here. Possible comment fodder follows. Other topics are also fair game.

If you are on the front page, click “more” to see today’s items (updated sporadically; items time-stamped 6:05 a.m., if any, were posted earlier and held).
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Positivity: Rep. Jaime Herrera Beutler celebrates ‘miracle’ baby girl born with Potter’s sequence, likely first survivor of rare condition

Filed under: Health Care,Life-Based News,Positivity — Tom @ 6:00 am

From Washington State, and Baltimore (HT Hot Air):

MONDAY, JULY 29, 2013, 1:39 PM

Arriving prematurely at 28 weeks, baby Abigail Rose weighed 2 pounds, 12 ounces at birth. The condition is defined by an absence of amniotic fluid in the womb, which stunts the baby’s lung development.

Republican Rep. Jaime Herrera Beutler is celebrating the arrival of her “miracle” baby, who was born with a rare and usually fatal condition known as Potter’s sequence.

The staunchly anti-abortion congresswoman revealed the devastating diagnosis earlier in her pregnancy but resolved to bring the now-2-week-old Abigail Rose to term.

She is thought to be the first baby to survive the condition.

Doctors remain “cautiously optimistic” about the future but called the baby’s survival “unprecedented.”

“She is every bit a miracle,” the new mother, from Washington state, said in a release. …

Go here for the rest of the story.

As Poor GDP Report Awaits, AP’s Rugaber Starts Early With ‘Prosperity’s Just Around the Corner’ Meme

During the Obama administration’s 4-1/2 year track record of economic underachievement, establishment press business reporters have usually waited until the bad news actually comes out before working on convincing readers that future news will be better.

Not this time, at least at the Associated Press, aka the Administration’s Press. Christopher “Gone are the fears that the economy could fall into a recession” Rugaber didn’t bother to wait for tomorrow’s report on Gross Domestic Product to tell readers that the rest of the year will be fine. The fact that these rosy forecasts have rarely come to pass during the past 17 quarters didn’t seem to faze him a bit.

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