March 27, 2015

AP Fantasy: U.S. Economic Growth Has Been ‘Really Durable’

The latest wet kiss from the business press thrown the Obama administration’s way came from Martin Crutsinger at the Associated Press, aka the Administration’s Press, late this afternoon.

Crutsinger, continuing to richly earn the “Worst Economics Writer” tag he received from National Review’s Kevin Williamson two years ago, absurdly characterized the mediocre, pathetic economic peformance of the past 5-1/2 years — the worst post-World War II “recovery” on record, by miles — as “sluggish,” but “one of the most durable.” As traditionally and objectively measured, that statement is absolutely false, and he should know it.

Crutsinger deliberately avoided mentioning consecutive quarters of economic growth, the measurement of post-downturn economic consistency commonly used to determine the durability of recoveries since at the least the 1960s. Here’s why he didn’t do that (information is found in interactive Table 1.1.1 found here at the Bureau of Economic Analysis):

  • The Kennedy-Johnson era’s economic managers rightly bragged about their growth streak of 35 consecutive quarters (from 1Q61 to 3Q69). The momentum of that era’s last five years was largely stoked by cuts in the top individual income tax rates.
  • The 1980s recovery stoked by Ronald Reagan’s supply-side tax cuts and relative regulatory restraint led to 32 straight quarters of growth (from 4Q82 to 3Q90).
  • The Bush 41-Clinton-era economy (the first seven quarters of growth occurred during Bush 41′s presidency), buoyed during its final four years by a 1997 Republican-initiated capital gains tax cut and a modicum of government budgetary restraint exercised by the GOP-controlled Congress, put in a record 39 consecutive quarters of growth (from 2Q1991 to 4Q2000).
  • Under George W. Bush’s awful, horrid, disastrous economic stewardship (that’s sarcasm, folks), the economy recorded 25 straight quarters of growth (from 4Q2001 to 4Q2007).
  • In the 22 quarters since the recession officially ended, the Obama economy has already had turned in two sharply negative quarters (1Q2011, -1.5 percent annualized; 1Q2014, and -2.1 percent annualized). Its longest streak of consecutive quarters of growth has been 11 — and one of the quarters in that streak, at a whopping +0.1 percent annualized (4Q2012), could go negative when comprehensive GDP revisions are released in June.

Additionally, if the trajectory of forecasts relating to the current quarter continue to fall as steeply as they have during the past few weeks, we may see another negative number turned in next month.

Crutsinger is used to reporting on measurements of expansion not just in terms of quarters, but in terms of months, as seen in a February 2000 item he wrote when the Clinton economic team boasted that its economic expansion (which included 22 months seen during the Bush 41 administration) had hit a record 107 months. So for him to now ignore negative quarters while calling the current recovery “durable” is really too much to take — even coming from him.

It also makes the following paragraph found in Crutsinger’s report this afternoon an exercise in sheer fantasy:

But like the turtle versus the hare, slow and steady may win the day. The current expansion will mark its sixth anniversary in June, meaning it will have already lasted 14 months longer than the average expansion since the end of World War II. Before the war, periods of expansion tended to be shorter and the economy more volatile.

It’s has been a better-than-average expansion — except when the economy hasn’t expanded. Zheesh.

The best Crutsinger can claim is that the economy has avoided another recession as defined by the National Bureau of Economic Research for 66 months. By contrast, the number of consecutive months of expansion claimed during the Kennedy-Johnson, Reagan-Bush 41, and Bush 41-Clinton eras were accurate, because they all had strings of uninterrupted quarterly GDP growth.

All of this is bad enough, but the indifference towards the suffering those on the employment market’s sidelines continue to endure exhibited by Crutsinger and designated sunnyside economist Mark Zandi of Moody’s Analytics is especially galling, as seen in the following passage:

“This recovery has been disappointing in terms of growth so far but if you are looking for a silver lining, it is that the slow rate of growth has allowed the economy to avoid the kinds of excesses that can lead to over-building, over-lending or other problems,” said Mark Zandi, chief economist at Moody’s Analytics. “We are a long way from that.”

No “excesses”? Who does Zandi think he’s kidding?

Here are a few “excesses”: Among many others, there’s still an excess of people not participating in the workforce. There’s still an unprecedented excess of people who have been out of work for 26 weeks or more, especially if you include the millions of Americans who want to find work arbitrarily excluded from the workforce by the Bureau of Labor Statistics. There is still an excess of job creation in industries which don’t pay well, leading to overall non-existent real wage growth. And there’s still a shortage of full-time work, given that seasonally adjusted full-time employment is still over 1 million jobs below its prerecession peak.

Speaking of “excesses” in Zandi’s terms, what we have is a stock market bubble supported by Federal Reserve quantitative easing. It threatens to burst any time the Fed even whispers about raising interest rates above their basically zero level of the past six years. It may burst anyway if the corporate earnings decline the government reported today continues.

This economy isn’t “durable” at all. It’s so fragile that it clearly can’t even take an interest-rate increase without courting danger. And if the Fed ever started reducing its holdings of over $4 trillion in government bonds, as then-Fed Chair Ben Bernanke said himself in an unguarded moment, “The economy would tank.” Of course almost everyone, including AP, ignored Bernanke’s remark when he made it in July 2013.

But Marty Crutsinger wants his readers to think it’s all good. It’s not. It’s almost inconceivable that he doesn’t know that.

Cross-posted at


1 Comment

  1. [...] – Tom Blumer blows up the AP meme that the Place­bo­Care McE­con­omy is “durable”. By Steve [...]

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