February 28, 2015

AP’s Crutsinger Provides Four (Not Five) Weak Reasons Why Lowered 4th Quarter GDP Isn’t a Problem

After yesterday’s government report on economic growth reduced the fourth quarter’s originally estimated increase in gross domestic product from an annualized 2.6 percent to 2.2 percent, you just knew that the Associated Press, aka the Administration’s Press, would try to ride to the rescue.

Late Friday afternoon, the AP’s Martin Crutsinger gamely tried to concoct five reasons why we shouldn’t worry our pretty little heads over a growth figure which confirms that the worst post-World War II recovery on record continues to be the worst post-World War II recovery on record. He only came up with four highly questionable reasons, while pretending he still had five (bolds and numbered tags are mine; I also numbered the reporter’s reasons):

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February 27, 2015

AP Report on Wisconsin Right to Work Move Presents Union Side Only

A couple of thousand protesters have showed up to rail against the Wisconsin Legislature’s move to pass right to work legislation this week.

That number is far smaller than what was seen four years ago, when Badger State Governor Scott Walker championed Act 10, a budget repair bill which limited — but please note, contrary to frequent press assertions, did not eliminate — most public-sector unions’ collective bargaining rights. Todd Richmond’s Wednesday evening coverage of the situation in Madison at the Associated Press got plenty of perspectives from union members and others upset with the legislature’s latest move, but predictably failed to get any insights from right to work supporters or those skeptical of protesters’ positions. Excerpts follow the jump (bolds and numbereed tags are mine):

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Former WashPost Reporter at the Fiscal Times Falsely Claims Food Stamp Caseload Is Down 11 Percent

The Fiscal Times is a generally strong and informative online publication. That said, it has occasionally exhibits symptoms of what could be seen as either serious leftist bias, quite disappointing ignorance, or both.

One such example arrived in my email box early this morning. It contained the following headline and opening tease for a story concerning the food stamp program:

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4Q14 Gross Domestic Product, 1st Revision: An Annualized 2.2 Percent, Down From Original 2.6 Percent Estimate

Filed under: Economy,Taxes & Government — Tom @ 6:51 am

Predictions:

  • Yahoo.com’s Economic Calendar has a Briefing.com estimate of an annualized 2.0 percent and “Market Expects” prediction of 2.1 percent, down from the 2.6 percent originally reported in late January. We should also recall that forecasts before the first release ranged from 3.0 percent to 3.6 percent.
  • Bloomberg’s writeup tells us that “Household consumption, which is the biggest factor in growth, forecast to hold at the previously reported 4.3 percent pace.” That is “probably owed to strong job growth last year.” I think Zero Hedge has observed that it’s because families have had to spend more on medical care out of their own pockets.
  • The Associated Press isn’t carrying a prediction in its overnight report on the overseas stock markets. The wire service’s coverage of yesterday’s durable goods report had a prediction of 2.1 percent.
  • Though you never know with government reports, I have pointed to Macroeconomic Advisers’ mid-February blog post indicating their estimate that GDP contracted by 0.6 percent in December alone as a reason to believe that today’s number may come in lower than 2.0 percent — perhaps quite a bit lower. If it does, the obvious question should be why the press ignored what the highly respected firm was saying.
  • A mid-February Wall Street Journal blog post carried estimates ranging from 1.7 percent to 2.0 percent.

The report will be here at 8:30.

HERE IT IS (permanent link): Not quite as big of a drop as thought —

Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 2.2 percent in the fourth quarter of 2014, according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With the second estimate for the fourth quarter, private inventory investment increased less than previously estimated, while nonresidential fixed investment increased more (see “Revisions” on page 3).

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, state and local government spending, private inventory investment, and residential fixed 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 deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an acceleration in PCE, an upturn in private inventory investment, and an acceleration in state and local government spending.

Here’s the scoreboard:

4Q14GDP022715rev

Because of other commitments, I won’t have any time to review the revults until this evening, or perhaps even Saturday morning. I’ll try to monitor the blog for comments, and will post any comments as I see as soon as I see them.

February 26, 2015

At AP, a Vague Headline and Weak Coverage of the Halbig Contingency Plan Controversy

The Associated Press’s headline at Alan Fram’s coverage of the controversy over the existence of an Obama administration contingency plan if it loses the Halbig v. Burwell case pending at the Supreme Court may be among the most inchoherent ever: “GOP CLAIMS PAPER SHOWS FED AIDES’ PREPS FOR HEALTH LAW LOSS.”

“Paper”? What is in question is an alleged 100-page contingency plan should the Court declare that subsidies paid by HealthCare.gov, the federal health insurance exchange for over three dozen states, are illegal. “Health law loss”? What does that even mean? The AP seems to be hoping that the story’s lousy headline will cause most potential readers to ignore it. Fram’s actual story also has its share of weaknesses, the most important of which is his failure to identify the administration’s declaration that such a a plan doesn’t exist as a de facto admission of a fundanmental and serious management failure (bolds are mine throughout this post; numbered tags are mine):

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Initial Unemployment Claims (022615): 313K SA; Raw Claims 10% Below Same Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 8:29 am

Predictions: Couldn’t find predictions at Bloomberg or Business Insider, but Yahoo’s Economic Calendar has a Briefing.com forecast of 295,000 seasonally adjusted claims, and a “market expects” figure of 290,000. Both figures are up a bit from last week’s 283K.

The report will be here at 8:30.

HERE IT IS (permanent link), with a pretty big jump:

SEASONALLY ADJUSTED DATA

In the week ending February 21, the advance figure for seasonally adjusted initial claims was 313,000, an increase of 31,000 from the previous week’s revised level. The previous week’s level was revised down by 1,000 from 283,000 to 282,000. The 4-week moving average was 294,500, an increase of 11,500 from the previous week’s revised average. The previous week’s average was revised down by 250 from 283,250 to 283,000.

… UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 280,000 in the week ending February 21, an increase of 2,096 (or 0.8 percent) from the previous week. The seasonal factors had expected a decrease of 25,110 (or -9.0 percent) from the previous week. There were 312,665 initial claims in the comparable week in 2014.

I don’t find today’s result alarming, because the raw claims situation seems to still be under control. The seasonal factor of 89.6 that DOL used in conversion seems to have assumed too much of a raw claims reduction due to the President’s Day holiday.

Last year’s seasonalized 351,000 was also unusually high compared to previous and subsequent weeks, and it was again due in my opinion to an artficially low seasonal conversion factor (89.2).

February 23, 2015

AP’s Kuhnhenn Seems to Enjoy Obama ‘Taunting’ Republicans About Worst Economy in 62 Years

On Friday, Jim Kuhnhenn at the Associated Press, aka the Administration’s Press, seemed to enjoy President Barack Obama’s rant against Republicans and others grossly dissatisfied with the economy’s performance on his watch. He described Obama as “taunting Republicans” in his speech at the Democratic Party’s winter meeting in Washington.

The wire service itself seems less enamored of Kuhnhenn’s less than presidential portrayal of Obama. Based on a search on “taunting,” the first word in his report, it is no longer present at the AP’s national site.

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February 22, 2015

WashPost’s Milbank Accuses Walker of Giuliani-Related ‘Cowardice’

In his Friday Washington Post column, Dana Milbank accused Scott Walker of “cowardice” which “ought to disqualify him as a serious presidential contender.”

Walker’s alleged “cowardice” was his failure to disown the following remark made by New York City Mayor Rudy Giuliani: “I do not believe that the president loves America.” Last time I checked, Rudy’s entitled to his opinion, and Walker’s entitled to opt out of psychoanalyzing the Oval Office’s current occupant. This sent Milbank into a blind fury (bolds and numbered tags are mine):

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The Economy’s Worst 8-Year Run in 62 Years

With two more rough years on the horizon.

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This column went up at PJ Media Friday evening and was teased here at BizzyBlog on Saturday.

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A couple of publications have noted that 2014 was the ninth consecutive year during which the U.S. economy grew by less than 3 percent.

They’re being too kind. Last year was the eighth year in a row of sub-2.5 percent growth, following four straight years (2003-2006) of higher growth.

It’s hardly a coincidence that the first year of that awful 2007-2014 streak just so happens to have been the same year that the Democratic Party took legislative control in Washington.

The nation’s political and media elites were quite pleased with themselves when the November 2006 elections brought about that result, largely because their daily hostility to all things Republican and/or conservative contributed mightily to it. They were absolutely ecstatic when Barack Obama, Mr. Perfectly Creased Pants, won the November 2008 presidential election and took office in January 2009.

As will be seen shortly, the former event marked the beginning of the U.S. economy’s worst eight-year stretch since 1945-1952. Obama’s presence in the Oval Office until January 2017 virtually ensures that we’ll have at least two more years of the policies which brought on that miserable result.

Raising the minimum wage was a key agenda item for new House Speaker Nancy Pelosi and Majority leader Harry Reid after their party took over Congress in 2007. The resulting effects on overall employment have been gruesome, to the point where the people who arbitrarily determine such things have absurdly decided, in the interest of covering their tracks, that the 4.5 percent unemployment rate seen during the middle of the past decade is no longer achievable, and that “full employment” is really a rate of 5.5 percent.

The higher minimum federal wage, and the even higher hourly minimums seen in many states and cities, have been especially disastrous for the very people supposedly targeted for help. Since the end of 2006, the seasonally adjusted black teen unemployment rate has risen by 5.5 points to 29.7 percent; that rate got perilously close to 50 percent during the recession. The only reason that the number of unemployed black teens is barely higher now than it was eight years ago is that far fewer of them are even bothering to look for work, and therefore aren’t considered part of that statistic. The average black teen labor force participation rate during 2014 of 27.2 percent was 6.8 points lower than that seen eight years earlier; the 2014 average employment-population ratio of 18.2 percent was 5.9 points lower.

Not satisfied with the number of job prospects they have already ruined for those who most need their first gainful employment opportunity, President Obama continues to push for a minimum-wage increase to $10.10 per hour, while leftist fever-swamp cities like Seattle are heading towards hourly rates as high as $15. More unemployment and more of the harmful effects of idleness await.

Congressional actions hostile to the economy during 2007 and 2008, poorly resisted by President George W. Bush and the Republican congressional minority, were bad enough. After Obama sewed up the Democratic presidential nomination in the spring of 2008, he and his party worsened matters. Their hostility towards developing energy resources and their intent to impose tax and regulatory overkill if elected became readily apparent, sending the economy into a far bigger swoon than the housing bubble alone would have caused. Thus was born the Pelosi-Obama-Reid (POR) economy.

When I first recognized the rapidly deteriorating situation, I asked:

In this business climate, are you going to hire more people? Replace employees when they leave? Expand your business?

As anyone could have predicted, the answers were “No,” “No,” and “Heck no.”

During the presidential transition, Obama let his community organizer mask slip on a few key occasions, inflicting further serious damage. One such incident occurred when he supported union workers illegally occupying a bankrupt company’s plant by telling reporters: “They’re absolutely right.” I wrote at the time that Obama’s statement of solidarity “set off alarms in the offices of entrepreneurs, businesspeople, and investors everywhere.” In the first full month after the sit-in, the economy shed more jobs than in any other month since such records have been kept.

Two years of Democratic control of Congress followed by six years of Obamanomics have given us the worst economic performance in 62 years:

8yearGDPgrowthPostWW2to2014

The 1952 result contains four difficult years of transition to peacetime following World War II; two minimum wage increases during that period may also have held the economy back. After that, the economy stayed generally healthy over long-term periods for over 50 years, until 2006. Even someone not conversant with economic policy can recognize that something has gone terribly wrong since then.

The already awful 9.99 percent result for 2007-2014 seems destined to drop a bit further. The latest estimates for fourth-quarter economic growth are coming in at an annualized 1.7 percent to 2.0 percent, far lower than the 2.6 percent the government reported in late January.

They are dozens of contributors to the current malaise, but three of them capsulize the horrid situation:

  • The Obama administration has spent six years passive-aggressively dithering over approving the 1,200-mile Keystone Pipeline — even though the nation currently has 2.6 million miles of oil and gas pipelines in place functioning virtually without incident.
  • Operators of certain legal but politically incorrect businesses have seen their banking relationships terminated by financial institutions intimidated into their decisions by the government’s Operation Choke Point. This is a development which one observer correctly noted should be “terrifying to business owners in every industry.”
  • The administration has been operating a “shadow immigration system,” which during the past six years has issued 5.5 million work permits to non-citizens. No wonder legal U.S. citizens aren’t impressed by the government’s reported job-growth numbers.

Thus, agenda-driven regulators are deliberately holding up economic progress and bullying existing businesses, while illegal competition undercuts citizens who want jobs. It’s utterly amazing that the U.S. economy is growing at all. Given a recent report that “fewer native-born Americans are working today than were at the end of 2007,” perhaps the “U.S. citizen economy” really hasn’t.

Madnesses such as those just described, and so many others, will continue as long as Congress is unwilling to fully exercise its power of the purse. Unless we see a miraculous change in outlook, that’s not going to happen.

Prepare for two more very rough years.

Lenovo’s Consumer Betrayal: A National Security Betrayal Too?

Via Zero Hedge, covered in several other places:

Lenovo Group, the largest computer manufacturer in the world, has made a rather stunning admission that they have been pre-installing tracking software on their PCs.

The tracking software is made by a company called Superfish, which apparently paid some “very minor compensation” to Lenovo for putting the software on people’s computers.

The Superfish program is a total disaster.

It has image recognition algorithms which essentially monitor what a user is looking at… then suggests relevant ads based on what it thinks you might like.

This is not only REALLY high up on the creepy scale, it also completely destroys Internet security.

the tracking software basically fools a web browser into believing that a connection is secure when it’s not… all for the purpose of pushing more ads in your face.

This scheme is so powerful that even if users uninstall the Superfish software, the security breach still remains.

This is so flagrant I have to imagine that even the NSA is shocked.

After its initial approach of being completely unapologetic and dismissal, Lenovo is now groveling for forgiveness.

Sadly, I think there’s reason to doubt that it’s only about ads.

Yes, Lenovo is majority publicly-held. But it’s also a China-based company. It’s not unreasonable to expect that it would be receptive to “requests” for “cooperation” from the Chinese government run by the Peoples Army to engage in security-related mischief that goes well beyond ad placement.

One clue that there may be a lot more to this than meets the eye is the defiant “initial approach” noted in the final excerpted paragraph.

February 21, 2015

Shhh! Downward Revision to Fourth-Quarter 2014 Growth Is Very Likely

Filed under: Economy,Taxes & Government — Tom @ 9:55 am

On February 12, in a report on inventories, the Associated Press’s Martin Crutsinger referred to an economist who believed, in Crutsinger’s words, “that the economy expanded at a 2 percent annual rate in the final three months of the year (2014).” That result would be a fairly significant downward revision to the 2.6 percent rate the government estimated in late January.

The next day, Macroeconomic Advisers, a leading economic research firm which describes itself as “independent with no loyalty to any political ideology,” estimated that the economy, as measured in its Gross Domesitic Product, “declined by 0.6% in December, and growth for November was revised down by three-tenths.” Since then, though they may be out there somewhere, I haven’t seen AP or other major news outlets make any reference to analysts’ revised fourth-quarter estimates.

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Latest PJ Media Column (‘The Economy’s Worst 8-Year Run in 62 Years’) Is Up

Filed under: Economy,Taxes & Government — Tom @ 1:00 am

This post will stay at the top on Saturday.

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It’s here.

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

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Here’s the column’s core graph:

8yearGDPgrowthPostWW2to2014

You have to go back to the early-1950s to find 8 years of real economic growth worse than what we saw in 2007-2014.

Additionally:

  • The 2007-2014 figure is virtually destined to come down a tiny bit because of impending downward revisions to the initial fourth-quarter annualized GDP result of 2.6 percent. Barring a big upside data surprise in the next few business days, 2.0 percent seems to be pretty much the best hope. 1 percent or lower is not at all out of the question.
  • It wouldn’t surprise me if the comprehensive revision coming in late spring may reveal that the heady results of 2Q14 and 3Q14 (annualized 4.6 percent and 5.0 percent, respectively) were overstated.
February 20, 2015

Goldman Sachs: The World’s Economy Is In Contraction

Filed under: Economy,Taxes & Government — Tom @ 11:13 am

What?

Do you mean to tell me that cheap oil and trillions upon trillions of dollars of government stimulus and deficit spending aren’t working?

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UPDATE, 11:45 A.M.: Related, but tying back to fourth quarter GDP, which seems destined to fall sharply from its originally reported annualized 2.6 percent —

Monthly GDP declined 0.6% in December, and growth for November was revised down by three-tenths. The decline in December reflected a sharp deceleration in PCE and a large decline in net exports; nonfarm inventory investment declined somewhat.

Unfortunately, I could not determine Macroeconomic Advisers’ original or resulting November values.

If Macro Advisers is right, then to even hold a 1.6% annualized result, October and November need to have advanced by a half-point each, or (ignoring compounding) an annualized rate of 6 percent each month. That would net out to +0.4 percent for the quarter (0.5 + 0.5 – 0.6), which would annualize to +1.6 percent.

That doesn’t seem likely. Again if Macro Advisers is right about December, a 1 percent or lower reading (which even then would require a quite robust 0.425 percent raw advance in both October and November [5.1 percent annualized]), is not at all out of the question.

February 19, 2015

Another Reason Why 4Q14 GDP May Be Revised Down Even Further

Filed under: Economy,Taxes & Government — Tom @ 9:59 am

The fourth-quarter increase in Industrial Production is half of what it was thought to be in mid-January, and is down by 0.6 percent from where it was after January’s report and after the first GDP release for the fourth quarter:

IndustrialProductionOctToDec2014

Links: Feb. 18 release; Jan. 16 release

The Wall Street Journal reported revised estimates for 4Q14 ranging from 1.7 percent to 2 percent last week, down from the government’s 2.6 percent reported in late January.

The Industrial Production increase coming in at about 60 percent of what it was thought to be in late January (+0.7 compared to +1.2) won’t improve matters.

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UPDATE, 3:30 P.M.: Longer-term, we have all the makings of an anemic Two Percent economy — even in the “best” of times.

Initial Unemployment Claims (021915): 283K SA; Raw Claims 14% Lower Than Comparable Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 6:51 am

Prediction: Yahoo Finance is predicting 295,000 seasonally adjusted claims, down from last week’s 304,000, which was a significant increase from the previous week.

Seasonal adjustment factors:

  • Week ended Feb. 15, 2014 — 97.9
  • Week ended Feb. 14, 2015 — 98.5

Raw Claims:

  • Week ended Feb. 15, 2014 — 322,761 (a 10% drop from Feb. 8, 2014)
  • Week ended Feb. 7, 2015 — 323,672 (before possible revision); Update: The revision was only about +500 claims.

To meet or beat the prediction, raw claims will need to come in at 291,000 or below (291K divided by 98.5 equals 295K, rounded). That would be 10% below last year’s raw claims level, which would be nice to see.

We’ll see if that happens here at 8:30 a.m.

HERE IT IS (permanent link):

SEASONALLY ADJUSTED DATA

In the week ending February 14, the advance figure for seasonally adjusted initial claims was 283,000, a decrease of 21,000 from the previous week’s unrevised level of 304,000. The 4-week moving average was 283,250, a decrease of 6,500 from the previous week’s unrevised average of 289,750.

UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 278,986 in the week ending February 14, a decrease of 45,213 (or -13.9 percent) from the previous week. The seasonal factors had expected a decrease of 24,353 (or -7.5 percent) from the previous week. There were 322,761 initial claims in the comparable week in 2014.

Both the current week and last year’s comparable week were just before President’s Day.

It’s hard to complain about today’s result.