Note: This column was originally posted at Pajamas Media Thursday under the title “Federal Budget Woes: It’s the Spending, Stupid!”

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The April Monthly Treasury Statement issued by Uncle Sam on Monday should put to rest the idea that the government is not getting enough in “revenues” (i.e., taxes) to get by.

Contrary to the expectations of many, including myself, that report, along with the April 30 Daily Treasury Statement that preceded it, showed that there is still a bit of life left in George Bush’s supply-side tax cuts:

After April 2007’s record collections of $383.6 billion, which broke the previous one-month record set in April 2001 by over 15%, I expected the sluggish economy’s mediocre 0.6% growth in each of the past two quarters to cause April 2008’s receipts to come in lower. Surprise.

What is especially heartening in the table above is the large increase in not-withheld receipts. As I noted at my home blog on April 29 when it first became clear that a new receipts record was on the horizon (bold is mine):

The unexpected increase in this not-withheld category consists mostly of final payments that accompany individual 1040s for 2007, plus first-quarter 2008 estimated payments. The increase may not only reflect that entrepreneurs and the self-employed had pretty decent years in 2007, but that many of them are thinking, in the face of relentless media harping to the contrary, that 2008 will be at least as profitable. Estimated payments are supposed to be 25% of last year’s total tax bill, unless the taxpayer figures that the current year’s tax bill will be lower, in which case they can pay in less. I would think that anyone who could defensibly pay in less, would pay in less.

If these not-withheld receipts continue to soar in comparison to previous years, we may see further overall increases in collections that outpace inflation in the next few months. Imagine that.

The record-breaking news from the Treasury also leads to a pretty good question relating to the overall economy: If things are so bad, why were April’s tax receipts, which include first-quarter 2008 estimated payments, so high?

In fact, as I pointed out last week, things aren’t so bad. They’re actually improving, and the media’s seemingly fond wish for a recession may go ungranted. Last week, the Institute for Supply Management’s Spring 2008 Semiannual Economic Forecast predicted annualized 1% growth in manufacturing and 2.7% growth in services, which includes the troubled housing and financial services sectors, during the rest of the year. On a weighted-average basis (15% manufacturing, 85% services), that’s 2.4% — not great, but certainly not recessionary.

Looking back, the increases in collections during the past four years have been nothing short of remarkable:

As was the case in the 1920s with Coolidge, the 1960s with Kennedy, the 1980s with Reagan, and 1997 with the Clinton capital-gains tax cut, Bush’s lower tax rates and investment-related tax cuts have led to impressive increases in money coming into the government. Supply-side economics’ naysayers have once again been shown to be wrong.

Supply-side econ works in the opposite direction too. If taxes are allowed to return to their pre-2003 levels over the next few years, as will be the case if Congress does not act, Treasury collections will likely decline, or will at least trail inflation significantly. One could and should argue that in addition to extending the existing tax system — the one the markets have gotten used to for the past six years — the next president should push to enact another business-stimulating, collection-increasing tax cut. Hong Kong, Ireland, Iceland, and Australia, as well as Reagan during the 1980s, have all shown that multiple supply-side cuts continue to lead to increased collections.

Unfortunately, as has been the case during almost all of the current fiscal year and most of the past seven years, April’s great collections news was more than negated by out-of-control spending:

This is a reversal of what had been an unusually good fiscal 2007, where spending only grew 2.8% (last item at link), the lowest in many, many years. Last year’s result occurred because a vulnerable Republican Congress finally got spending religion when it put together the fiscal 2007 budget. Too bad for them that it was too little and too late to save them from losing control of both chambers in the November 2006 elections.

Fiscal 2008 thus far represents the first output of the Pelosi-Reid Congress, which deserves at least half the blame for its dismal result (President Bush gets the rest). Even before considering the “stimulus” checks that are being mailed this month, 7%-plus spending increases with revenues going up at a much slower rate is an unsustainable situation. Yet all three remaining presidential candidates are proposing huge spending initiatives. While Barack Obama’s and Hillary Clinton’s proposals are better known, John McCain’s plans for a massive conversion to a greener economy — in the name of global warming that hasn’t been happening for about ten years — will create a bureaucratic monster that will demand whatever money is necessary to carry out its goals. And it won’t be cheap.

Will anyone tell the candidates that we can’t afford their grandiose plans?

How different do you think Americans’ take on the current economy would be if the business press picked up on the fact that the bad employment news is coming predominantly out of two struggling states — and that most of the rest of the nation is holding its own?

That’s the question that occurred to me as I looked at April’s Bureau of Labor Statistics regional and state employment and unemployment report this morning.

Three things stick out:
- How big of a drag California is in the overall employment picture.
- How much of an outlier Michigan is.
- How Oklahoma continues to impress.

How much California and Michigan are affecting the overall picture is a real eye-opener:

(Note: The seasonally adjusted rate for all states differs from the nationally reported rate of 5.0% earlier this month because of differences in data collection methods.)

The Not-So-Golden State and the home of the Wolverines have a combined 15% of the workforce, but almost 20% of the unemployed. Without them (tempting, but I have relatives in CA who needs to be warned first), the seasonally adjusted unemployment rate would be 0.2% lower, the unadjusted rate would be 0.3% lower, and the press wouldn’t be talking about the supposed recession (OK, they wouldn’t be talking about it quite as much).

Only three other “states” — relatively small AK, DC, and RI — have seasonally adjusted or unadjusted unemployment rates of 6.0% or above. Roughly two-thirds of all states have unemployment rates of 4.9% or lower.

So at least from a jobs standpoint, if you want to talk about “economies” in recession (a term that should really be limited to whole countries), we should be talking about the states of California and Michigan, because the rest of the country is doing pretty well. I don’t recall two states having such a disproportionate impact on the national picture during other economic rough patches, with maybe Texas and Louisiana in the late 1970s and early 1980s being an exception.

If the election ends up being about the economy, and John McCain loses, it’s a pretty good bet that Arnold Schwarzenegger won’t make the Arizona Senator’s Christmas card list.

Many in the business press, rather than focusing on the mostly self-inflicted problems in California and Michigan, would appear to want to make it look as if economic sluggishness is a nationwide phenomenon, when it clearly isn’t.

Meanwhile, Oklahoma’s exceptional performance continued in April, as its seasonally adjusted and unadjusted unemployment rates came in at 3.2% and 2.9%, respectively — down 1.2% and 1.0%, respectively from April 2007. No state with a larger population has lower unemployment.

I theorized last month (at NewsBusters; at BizzyBlog) that the Sooner State’s enforcement-focused immigration legislation passed last year might a main contributor to its outstanding employment situation. The longer its rate stays much lower than the rest of the nation’s — even if California and Michigan are taken out of the comparison — the more compelling that theory will be.

Cross-posted at NewsBusters.org.

The Federal Reserve reported Thursday that April industrial production fell, the second negative reading in the past three months. Specifically, February and April fell by 0.7%, and March showed an increase of 0.2%.

In May 2001, that same report showed that production fell for the seventh consecutive month.

Seasonally adjusted data from the Fed indicates that industrial production during those seven months (October 2000 through April 2001) fell 2.6%.

During the past seven months (October 2007 through April 2008), industrial production has fallen 1.7%.

Guess which set of circumstances generated more talk of recession?

Covering the the 2001 report, the New York Times, appearing ever mindful that a Republican had occupied the White House less than four months, kept talk of a recession to a bare minimum:

Production At Factories Decreases For 7th Month

Industrial production fell in April for a seventh consecutive month, the longest string of declines since 1982.

Production at factories, mines and utilities declined 0.3 percent last month, after falling 0.1 percent in March, the Federal Reserve said. Manufacturing of business equipment, appliances and metals all dropped in April.

….. The string of declines in industrial production is the longest since March-December 1982. The economy was in recession from July 1981 to November 1982, according to statistics from the National Bureau of Economic Research.

Note that the Times made no attempt to claim that the country was currently in a recession.

The Associated Press’ Martin Crutsinger technically didn’t do that either, but he got as close as he possibly could while raising R-word specter and playing clever word games (bolds are mine):

Industrial output falls, second time in 3 months

Industrial output plunged in April as factories making everything from autos to heavy machinery felt the adverse effects of the weak economy. Analysts held out hope that production will revive in the second half of the year, helped by the government’s economic stimulus checks.

Industrial production dropped 0.7 percent last month, the Federal Reserve reported Thursday, more than double the decline that economists had expected.

….. Brian Bethune, an economist at Global Insight, said production will shrink again this quarter, marking the third negative quarter, the longest stretch of weakness in manufacturing since the last recession in 2001.

Bethune predicted a mild rebound for manufacturers starting this summer when consumers start spending 130 million economic stimulus checks that are now being mailed out.

“That extra cash is expected to roll gradually into consumer spending by June,” he said, calling the timing “indeed fortuitous.” Many analysts believe the $168 billion stimulus program Congress passed in February will not keep the country from toppling into a recession but will make the downturn shorter and milder than it otherwise would have been

….. The weak economy has triggered four straight months of job losses, often a sign that a recession has started. However, the April drop was just one-fourth the size of job losses in March, giving hope that the current economic slowdown may not be as severe as the past two recessions.

Clever Crutsinger is treating “recession,” “downturn,” and “current economic slowdown” (emphasis “current”) as synonyms. This would appear to be his lame attempt to get his “we’re in a recession” digs in while claiming plausible deniability.

There is nowhere near the level of evidence available to credibly claim that a recession is underway. Economic growth has been positive if anemic, the unemployment rate declined in April, and the weighted average of the Institute for Supply Management’s manufacturing and non-manufacturing indices is decidedly positive.

Yet Crutsinger, as noted last week, continues to “cling to recession.”

Cross-posted at NewsBusters.org.

It’s here.

I’ll post it at BizzyBlog on Saturday after the blackout expires.

How do you write an article about Uncle Sam’s April financial results without telling readers how much money came in and went out — especially if what came in was an all-time record?

Yesterday and today, many journalists have shown us how. Two of them are Martin Crutsinger of the Associated Press and Michael M. Phillips of the Wall Street Journal.

Crutsinger’s AP report actually made it appear as if collections is the problem area. In fact, as you will eventually see below, April’s result had nothing to do with “dampening” revenue growth, and everything to do with exploding spending.

Crutsinger began as follows:

Federal government surplus for April shrinks

The federal government ran a budget surplus of $159.3 billion in April, smaller than a year ago.

The Treasury Department reported Monday that the budget surplus for April was 10.4 percent lower than in April 2007.

The government traditionally runs a surplus in April, the month that tax returns are due. However, the weak economy has been dampening growth in revenues this year.

Crutsinger avoided mentioning April’s all-time record tax collections (April 2007 was the previous record), and the potential implications:

As I wrote on April 29 (at NewsBusters; at BizzyBlog), when it first became clear that a record month for federal receipts was in the making, one key element of this supply-side stunner of a result may be a positive leading economic indicator:

The unexpected increase in this not-withheld category consists mostly of final payments that accompany individual 1040s for 2007, plus first-quarter 2008 estimated payments. The increase may not only reflect that entrepreneurs and the self-employed had pretty decent years in 2007, but that many of them are thinking, in the face of relentless media harping to the contrary, that 2008 will be at least as profitable.

For some reason, the WSJ’s Phillips focused this morning on one line item that makes up less than 15% of total receipts, saved the really good receipts news for his fifth paragraph, and didn’t recognize just how good it was:

U.S. Receives Less From Corporate Taxes

With turmoil rocking financial markets and housing woes slowing the economy, corporate tax revenues are falling and leaving big holes in the federal budget.

The Treasury Department reported Monday that corporate income-tax revenue over the first seven months of the fiscal year, which began Oct. 1, was $171.1 billion, 14.7% lower than during the same period a year earlier. Meantime, government outlays rose 7.3%, to $1.7 trillion, and the federal deficit ballooned to $152 billion, 88% higher than the same period last fiscal year.

….. One slight bright spot is that while growth in revenue from individual income taxes has slowed, it has held up better than expected. That includes taxes paid by individuals on April 15, which reflect economic activity in calendar 2007, and those withheld monthly by employers, which reflect current business trends. Overall individual income-tax receipts reached $748 billion over the first seven months of fiscal 2008, up 6% from the period in fiscal 2007.

The decline in corporate tax collections, using Phillips’s 14.7% decrease, is about $29 billion. His “slight bright spot” from individual taxes, using his reported 6% increase, is over $42 billion. As you can see from the table above, the not-withheld portion of those collections, which is heavily influenced by tax payments from entrepreneurs, partnerships, and Sub-S corporations, was up $33 billion in April alone. For the first seven months of this year, those receipts (excluding refunds, which have not changed in an amount material to the gross collection numbers) are up by 12.3% over fiscal 2007.

(To verify, go to the Daily Treasury Statements for April 30, 2008 and April 30, 2007. Then compare the totals of the line item of the same description, plus a later, much smaller item called “Individual Income Taxes.” April 2008’s total is $357.6 billion [$342.0 + $15.6]; April 2007’s is $318.3 billion [$306.1 + 12.3]. $357.6 billion is 12.3% greater than $318.3 billion.)

As for the deficit, here is the clearly gloomy comparative news for the month of April and year-to-date (source: April 2008 Monthly Treasury Statement):

AP’s Crutsinger avoided mentioning spending, where Uncle Sam’s problem so obviously lies, until the seventh of his eight paragraphs. This later placement increases the likelihood that the spending news won’t appear at all in many edited reports at AP-subscribing publications.

To his credit, Phillips got spending into his second paragraph, but “somehow” never got around to enumerating April’s or fiscal 2008’s receipts.

Interestingly, if you follow the WSJ link from a Google News search on “treasury receipts” (not in quotes) done at about 10 a.m., you end up at Phillips’s article, which does not contain the text relating to receipts and disbursements shown at the search result (link not provided, as results on the same search done now may be different):

This search result, obtained by clicking on the “all 135 articles” link pictured above, and then viewing results “with duplicates included,” clearly shows that Crutsinger’s narrative dominated the coverage of yesterday’s Treasury report.

This would explain why you probably haven’t seen or heard anyone mentioning the April collections record.

Mission accomplished, eh Martin?

Cross-posted at NewsBusters.org.

I’ll just put these up without commentary beyond the title because of a time crunch.

The results are derived from April’s final Daily Treasury Statement, along with the April 2008 Monthly Treasury Statement, which was released at 2 PM this afternoon.

Here’s how the receipts came in compared to a year ago:

The $400 billion-plus collected is an alltime one-month record.

Here’s how Uncle Sam’s April collections and spendiing came in, and how the year-to-date situation has turned out thus far:

Note: This was originally posted at Pajamas Media Thursday morning under the title “Economy Improves, Old Media Ignores.”

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Those who are rooting for the economy to go into a tailspin cannot be pleased.

First, the government told us that the economy grew 0.6% in the first quarter.

I wasn’t happy, because I’d like to see the economy get back to at least the 3.2% average growth it experienced from the second quarter of 2003 through the third quarter of 2007.

But many in the business press seemed displeased for the opposite reason — that the number wasn’t negative. Since the everyday working definition of a “recession” is “a decline in GDP for two or more consecutive quarters,” it meant that there is no solid evidence of a recession.

Nevertheless, the Associated Press’s Jeannine Aversa insisted that “A growing number of economists believe the economy is in a recession and is indeed contracting now.”

Rex Nutting at MarketWatch.com went way over the top, as you can see from these article excerpts:

U.S. could have recession without drop in GDP
Analysis: Growth isn’t everything; jobs and incomes count more

….. the economy may be on track for the first recession in U.S. history without any quarterly decline in growth.

….. GDP is a pretty crude measurement of economic well-being.

….. GDP is a quarterly accounting gimmick that may not be an accurate reflection of the economic reality.

….. With GDP showing a small positive number in Wednesday’s report, no doubt many people will cheer that the economy has therefore avoided a recession. But that’s not what the other economic numbers show.

Nutting, MarketWatch’s Washington bureau chief, quoted no outside economist, analyst, government bureaucrat, think-tank researcher, or anyone else to back up his extraordinary claims. I have never seen anyone call GDP a “crude measurement” or an “accounting gimmick.” If I were working at Uncle Sam’s Bureau of Economic Analysis, I’d feel insulted.

Fortunately for the rest of us, the “other economic numbers” that followed last week’s GDP report do not support Nutting’s peculiar notion of “recession with growth.”

On Friday, the government’s employment report showed that the economy added over 700,000 jobs in April.

That’s right. Here’s the proof:

As you can see, government’s best estimate is that 703,000 more real people were actually working in April than were in March, and that 1,810,000 more were really doing so in April than in January.

If you’re surprised, I don’t blame you. Rex Nutting may be too.

That’s because the “official” jobs increase or decline and the unemployment rate are both adjusted for seasonality, or changes in real employment levels that have occurred in previous years. The fact that the number of jobs added in April 2008 was less than the number added in previous Aprils goes a long way towards explaining why the most recent seasonally adjusted jobs change was a loss of 20,000.

The business press has abused the seasonally adjusted job-loss numbers for the past three months by pretending that they represent actual people thrown out of work. They do not.

The AP’s Aversa was a primary offender last Friday, as she wrote:

Employers eliminated 20,000 jobs in April …..

….. It was the fourth straight month that employers cut jobs — bringing total losses to 260,000.

….. Businesses are handing out pink slips as they cope with an economy that is teetering on the edge of a recession, or possibly in one already.

….. On the employment front, construction companies, manufacturers, retailers, mortgage brokers and temporary help firms were among those shedding jobs in April.

Almost none of what Aversa cited above happened in the real world. Except for manufacturing, every major sector of the economy had more workers in April than in March.

To be clear, compared to previous years, April’s jobs increase was not as great as one would hope to see. But it was at least closer to the previous two Aprils (within 157,000, on average) than January’s decrease or February’s and March’s increases were to their comparable 2006 and 2007 figures. More improvement is needed, but April at least headed in the right direction.

Oh, and April’s unemployment rate, seasonally adjusted, fell 0.1% to 5.0%; the unadjusted rate fell from 5.2% to 4.8%.

Finally, the recent news from the Institute for Supply Management (ISM) has been very good.

Last Thursday, ISM reported that manufacturing’s 15% of the economy, while still slightly contracting, held steady. Its Manufacturing Index came in at 48.6% (any reading above 50% indicates expansion; below 50%, contraction).

On Monday, ISM’s Non-Manufacturing Index, covering the remaining 85% of the economy, including the troubled housing and financial services sectors, leaped into expansion mode with a reading of 52%. That was up 2.4% from the previous month and confounded the “experts,” who had predicted that it would go down.

Then on Tuesday, ISM had the nerve to issue its Spring 2008 Semiannual Economic Forecast, which said: “Economic Growth to Continue Throughout 2008.”

If you think you heard “How dare they!” murmurs from the business press, you may be right.

So the New York Times, as it lays people off, partially blames Bush — falsely, of course:

A little over two months ago, I told you that we would have to reduce staff within the newsroom by roughly 100 jobs given the difficult financial challenges facing our business and the deteriorating national economy.

Our hope, as you know, was that we could trim our payroll by encouraging enough volunteers to accept buyout offers. While the overwhelming majority of our reductions did indeed come from volunteers, we have been forced to resort to a relatively small numbers of layoffs to meet our assigned goal. (We are not going to discuss numbers or the details of the staff reduction, nor will we be releasing a list of names.)

Earth to Times: Stop reading your own bogus economic articles. Things are improving, not deteriorating, and the “challenges facing (y)our business” haven’t stopped your two Gotham rivals from holding their own.

The Times has been catching flak (HT Instapundit) for not releasing the names, and somewhat deservedly so, since it would release the names of those laid off at other companies, especially unfavored ones, in a heartbeat if it ever got its hands on such a list (or at a minimum would hound each released employee for an interview in search of dirt).

My bigger beef is that in a truly professional organization, the Times, as a company, would be giving them professional send-offs and good-luck wishes, including letting the employment market know who’s available publicly (unless the person involved wished otherwise). But the Times is not a professional organization.

The Times’s Newspaper Guild thinks the “Company appears to have violated (the) contract” in its handling of the layoffs.

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Speaking of the Times — On Wednesday, it had a rare example of pretty decent business commentary by the Times’s David Leonhardt, who nonetehless still owes us a retraction of his bogus “manufacturing recession” call over a year ago) —

….. when the new inflation numbers come out next week, they will indeed be misleading. They will be artificially high.

Rhetorically excessive question: “How much inflation has there been in the 19 years Wendy’s has had its 99-cent menu?” Yeah, I know it’s more than zero; but it’s barely so.

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The rebuilding of the Interstate 35W bridge in Minnesota is an ahead-of-schedule, temporary privatization success.

Locally, we should be treating the rebuilding/replacement of the Brent Spence Bridge connecting Cincinnati and Northern Kentucky similarly. It certainly shouldn’t take seven freaking years — until construction (hopefully) begins (not kidding).

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As he was on Wednesday, the Associated Press’s Martin Crutsinger was still “clinging to recession” on Thursday in his report on unemployment claims:

Many economists believe that a prolonged housing slump and severe credit crisis have pushed the economy into a recession. For that reason, they believe job layoffs will rise in coming months as the unemployment rate climbs higher.

Ian Shepherdson, chief U.S. economist for High Frequency Economics, said that even with the improvement this week, claims are now at a level equal to where they were at the start of the last recession in March 2001. He predicted that layoffs would increase further in coming months.

Mr. Shepherdson failed to note that:

• The workforce is 4%-plus bigger now than in March 2001, so current per-capita claims aren’t up to that level.
• Even though there never were two consecutive quarters of GDP contraction (the everyday working definition of “recession”), the alleged start of the “recession,” as “defined” by the “nonpartisan” National Bureau of Economic Research, should have been sometime during the summer of 2000.

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RIP Lynne Harvey, wife of legendary broadcaster Paul Harvey:

She was the first producer to enter the National Radio Hall of Fame and was inducted in 1997.

….. Bruce DuMont, (Radio Hall of Fame) museum founder and president, said Lynne Harvey was “one of the most remarkable behind-the-scenes talents in the history of American broadcasting, both radio and television.”

….. “She was to Paul Harvey what Colonel Parker was to Elvis Presley.”

DuMont called the Harveys’ relationship “probably the greatest love story that I’ve ever experienced.”

Her Hall of Fame bio is here. “The Rest of the Story” was her brainchild.

Husband Paul called her “Angel.” In her industry, she was “The First Lady of Radio.” Her passing should be receiving much more notice than it is.

The Associated Press’s business writers just won’t let go of their claim (or is it audacious hope?) that we are in a recession — not heading towards one, but actually in one.

Wednesday, despite yet another decent economic report, this one on productivity, the AP’s Martin Crutsinger downplayed a significant beating of expectations, and continued to invoke the R-word (bolds are mine):

Worker productivity rose by a better-than-expected amount in the first three months of the year while labor cost pressures eased.

The Labor Department reported Wednesday that productivity, the amount of output per hour of work, increased at an annual rate of 2.2 percent in the first quarter. That was slightly higher than the 1.5 percent increase that had been expected.

Analysts read the bigger-than-expected rise in productivity and the smaller increase in unit labor costs as a good sign that inflation pressures, at least on the labor front, are remaining under control and the country is not facing the danger of a wage-price spiral.

….. Many analysts think the country has already toppled into a recession. But overall economic growth, as measured by the gross domestic product, eked out a tiny 0.6 percent rate of increase in the first three months of the year, the same anemic pace as the final three months of last year.

I did the math just to make sure — 2.2% is 47% higher than 1.5%. Additionally, the 2.2% first-quarter performance was higher than the 1.8% reported for the fourth quarter of 2007, while expectations were that it would come in lower. “Slightly,” schmightly, Martin.

Consider the other economic news of the past week that Crutsinger had to blow past with his assertion that “many (unnamed) analysts” think that the US has “already toppled into a recession”:

• The Institute for Supply Management (ISM) Manufacturing Index released a week ago, covering about 15% of the economy — contracting, but barely, and holding steady.
• Last Friday’s Employment report — Unemployment rate down to 5.0%, seasonally adjusted job losses smaller than previous months.
• ISM’s Non-Manufacturing index, covering the remaining 85% of the economy, including the troubled housing and financial-services sectors — Moved significantly into expansion mode in April, blowing away expectations that it would further slip into contraction.

Topping all of that, the ISM issued its Spring Semiannual Economic Forecast Tuesday. The press release for the report had these headlines:

The weighted average of the expected 1% increase in manufacturing revenues and the 2.7% increase in non-manufacturing is about 2.4%. That’s not spectacular growth by any stretch, but it’s a far cry from negative growth.

Yet the AP’s Crutsinger and his unnamed analysts continue to “cling to recession.” Excuse me for believing that he, his business-reporting co-workers at AP, and their oft-unnamed agenda-driven “analysts” will continue their clinging until, oh, about early November.

Cross-posted at NewsBusters.org.

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UPDATE: Reuters looked at the ISM’s Spring Semiannual Economic Forecast and (of course) decided that the weak figure relating to 15% of the economy was more important than the better one about the other 85%. So this is the headline — “US Factory Growth Seen ‘Marginal’ in 2008: ISM.”

It’s here.

It will be posted at BizzyBlog on Saturday morning (link won’t work until then) under the title “The Economy Is Improving, While Old Media Remains Mired in ‘Recession’ Talk.”

Longtime readers here will recognize one of the column’s targets: Rex (”You can have a recession while the economy is growing”) Nutting (link is to a BizzyBlog site search on Nutting’s name).

Part of the May 5, 2008 series – “The Obamas and the TUCC Bulletins,” the point of which is that the claims by Barack and Michelle Obama that they have not been aware of the objectionable beliefs of their pastor and of his theology for the 20 years they have been church members are greatly lacking in credibility.

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M. Linda Jaramille, Executive Director, National UCC’s Witness for Justice; November 25, 2007, on the Southern California fires:

“Caught in the firestorm of racism” — On the Southern California fires: “In the midst of the physical fires, I was reminded of the firestorm of racism erupting as immigration debates continue.”

…. “The firestorm on the U.S. border is more than an inferno of flames.” ….

“Thankfully, the fires in Southern California are subsiding, but the firestorm of racism is far from over.”

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Rev. Dr. Samuel B. McKinney Pastor Emeritus Mount Zion Baptist Church, Seattle Washington; March 23, 2008:

when we look at the story of our people through the eyes of the resurrection of the Christ, again, in the words of Dr. Jones, “we are a resurrection people.”

Given all to which we have been subjected as a people, we should be extinct. We have been subjected to forced deportation from our homeland, chattel slavery, Jim Crow, separate and unequal institutional policies, racism and unfair administration of justice in this land—which our ancestors built. However, we have not been overcome by the injustices to which we have been subjected. African people in America are a “resurrection people.”

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Kanye West, quoted in Reginald Williams’s “Thought for the Week” in his “To Do Justice” section of the September 18 and 25, 2005 bulletins:

George Bush doesn’t care about black people.

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James Baldwin, quoted in Reginald Williams’s “Thought for the Week” in his “To Do Justice” section of the December 17, 2006 bulletin:

All the western nations have been caught in a lie, the lie of their pretended humanism.

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Sojourner Truth, quoted in Reginald Williams’s “Thought for the Week” in his “To Do Justice” section of the November 6, 2005 bulletin:

“There is a debt to the negro people which America can never repay. At least then, they must make amends.”

Part of the May 5, 2008 series – “The Obamas and the TUCC Bulletins,” the point of which is that the claims by Barack and Michelle Obama that they have not been aware of the objectionable beliefs of their pastor and of his theology for the 20 years they have been church members are greatly lacking in credibility.

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Note: Some of these are repeats from previous posts, but are deserving of repetition.

Reginald Williams; January 7, 2007 (pictured here):

Consider the following facts: Wal-Mart workers earn approximately $14,000 per year. Health care options for employees include a $1000 deductible for individuals, and $3,000 deductible for families. In addition, employees must also wait in order to qualify for benefits—six months for full-time employees, and one year for part-time employees. At a salary already under the living wage level, the mistreatment of its workers by this corporation that made in excess of $315 billion in 2005 is appalling.

Wal-Mart’s sales for the year ended January 31, 2006 were $315.7 billion. Its net income after taxes was $11.2 billion — less than 4% of sales.

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Reginald Williams; April 15, 2007 (pictured here):

The inhuman treatment and lack of respect given to Black people is still America’s pastime. America was founded on the dehumanization of Black folks, and it still operates with a vision that does not see Black people as human.

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Jeremiah Wright; August 26, 2007 (pictured here):

“Forty Years Later” not much has changed since that speech on the Washington Mall given by Dr. King. Since 1619, when you look at the ‘big picture,’ you will see that not much has changed either when it comes to the rights of Africans living in this country.

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Reginald Williams; November 18, 2007 (pictured here):

For many Indigenous Native Americans (Indian) people, “Thanksgiving” is a time of mourning, of remembering how a gift of generosity was rewarded by theft of land and seed corn, extermination of many from disease and gun, and near total destruction of many more from forced assimilation. As currently celebrated in this country, “Thanksgiving” is a bitter reminder of 500 years of betrayal returned for friendship.

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(thought I’d save this one for last)
Rev. Jeremiah Wright; September 25, 2005 (not signed by Wright, but presumptively his writing; pictured here):

From Murder to Concentration Camp!

The month of September has been an incredible month for African Americans in the United States of AmeriKKKa. Citizens of this country and people all over this world have watched incredulously as the lack of governmental response has murdered thousands of African Americans who are poor and who had no way out of the watery grave that could have been avoided.

Mercenaries from Israel were brought in to protect white property. Black Water (the guys who ran Abu Ghraib Prisons) were brought in as mercenaries to protect white property. White property was protected and black lives were lost!

The evacuees from New Orleans, from Mississippi and from Alabama have been spread out all over the country. Those here in Tinley Park have run away from murder and ended up in a concentration camp!

According to Wikipedia, the total death toll from Katrina in all states affected was 1,836. According to the City of New Orleans, less than 50% of the hurricane deaths in that city were African-American — a disproportionately lower percentage of the population.

Part of the May 5, 2008 series – “The Obamas and the TUCC Bulletins”

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Note: Some of these are repeats from previous posts, but are deserving of repetition.

Rev. Jeremiah Wright; July 17, 2005 (pictured here; opens in new window):

While you were looking the other way, Mr. Joseph C. Wilson IV, a good Republican, a man loyal to the “party,” and a man of integrity wrote an Op-Ed article for The New York Times. In his article he disputed George Bush’s administration’s claims about Sadaam Hussein’s nuclear program.

….. Because Mr. Wilson dared to tell the truth, the White House sought retribution! The Bush Administration publicly identified his wife as a CIA operative. The Bush Administration “leaked” information to identify his wife, Valerie Plane, as “an agency operative on weapons of mass destruction. In other words, they “outed” her!

Wright called for George Bush’s impeachment in that same essay.

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Rev. Jeremiah Wright; August 7, 2005 (pictured here):

….. this weekend marked the 60th anniversary of the most heinous act of terrorism since chattel slavery – the bombing of Hiroshima and Nagasaki …..

….. most Americans have no idea as to what we did in the terrorist act committed against the Japanese people.

Hiroshima and Nagasaki were also invoked in Wright’s infamous post-9/11 “chickens come home to roost” video.

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Rev. Jeremiah Wright; November 6, 2005 (pictured here):

“Both Washington and Jefferson were owners of Africans and fathered babies by African women.”

“(Thomas Jefferson is) the man who was a pedophile and raped the 15 year-old African girl, Sally Hemmings.”

As covered in this previous post, the claims are dubious at best, scurrilous at worst. This previous post notes that Wright made his Jefferson-pedophilia claim at funeral service several weeks ago.

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Reginald Williams; November 20, 2005 — on that year’s riots in France (pictured here):

Young persons who are sick and tired of the government’s and society’s exclusive, supremacist, racist attitude toward them, are rising up and making themselves heard. It is easy to decry the riots as just troublemakers who are off on a tangent. However, when one reviews the history of how Arabs and other immigrants from North Africa have been treated since World War II, one may begin to understand the unrest a bit better.

….. It is a common occurrence for police to demand that they lower their eyes, as in the Jim Crow South, as if dark-skinned people are not even worthy to look in the eyes of white policemen who are supposed to serve and protect.

This shows us that racism is not just an American entity, but a worldwide occurrence. In fact, if names were switched, it could very well be America rather than France.

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Reginald Williams; December 17, 2006 (pictured here):

The truth of the matter is that Pat Buchanan’s ancestors did not build this country; they stole this country. It was the enslaved Africans, and Native Americans who built this country from sea to sea on their backs without the benefit of a paycheck. Moreover, they were immigrants themselves who were welcomed in, and deceived those who hosted them.

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History and economics lessons, TUCC-style, continue in the next post.

….. to let you know that the Institute for Supply Management’s Non-Manufacturing Index returned pretty convincingly to expansion mode in April:

“The NMI (Non-Manufacturing Index) increased 2.4 percentage points to 52 percent, indicating expansion after three consecutive months of contraction within the non-manufacturing sector for April 2008.”

The report, which covers the 85% or so of the economy that isn’t manufacturing, blew away expectations of a 0.3% decline to 49.3%.

The weighted average of the two indices (manufacturing came in at a contracting but improving 48.6% last Thursday) is 51.5%. That is definitely expansion — not by as much as anyone would like, but decidedly positive.

MarketWatch’s Rex (”U.S. could have recession without drop in GDP because I say so”) Nutting was apparently not available for comment.

Recession, reschmession.

Note: This column originally appeared at Pajamas Media (”Press and Politicians Prematurely Crying Recession”) on Thursday.

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Yesterday, the government reported that the economy’s Gross Domestic Producdt (GDP) grew by an annualized 0.6%.

Many in the press, along with some politicians, who have been matter-of-factly assuming that we’ve been in a recession since early this year, have a little explaining to do.

Don’t stay up waiting for the apologies.

Let me be clear: Even if the result is revised upward a bit in May or June, the economy’s current performance is nothing to celebrate. In fact, I believe there should be more emphasis on the fact that after two really good quarters in 2007 — the second quarter’s 3.8% and the third quarter’s totally-forgotten 4.9% (see BEA table here) — economic growth hasn’t even matched population growth for two consecutive quarters. When that occurs, per-capita GDP, as well as per-household GDP, is going in the wrong direction: down.

But it’s one thing to be unhappy with how things are going. It’s quite another to keep shouting “recession” when GDP growth, though anemic, continues to be positive.

Though technically determining whether and when a recession actually occurred is more complicated, and is actually “determined” after-the-fact by the National Bureau of Economic Research, the everyday working definition of “recession” is very simple:

A recession is defined to be a period of two quarters of negative GDP growth.

Thus: a recession is a national or world event, by definition. And statistical aberrations or one-time events can almost never create a recession; e.g. if there were to be movement of economic activity (measured or real) around Jan 1, 2000, it could create the appearance of only one quarter of negative growth. For a recession to occur the real economy must decline.

(Aside: By that definition, there was no recession in 2000-2002. Just look here.)

The definition just cited is at About.com, which has been owned by the New York Times Company since 2005. Business reporters and columnists at the Times have been routinely ignoring the readily-available guidance at their online property for well over a year.

For example, way back on February 28, 2007, the Times’s David Leonhardt didn’t let the fact that a recession is “a national or world event” stop him from declaring that “For Manufacturing, a Recession Has Arrrived.” He reached the conclusion that manufacturing’s 15% of the economy was in a recession based on one weak durable goods report from the Commerce Department and two slightly below 50% readings (November 2006 and January 2007) in the Manufacturing Index (full index history is here) published by the Institute for Supply Management (ISM). An ISM Index reading above 50% indicates expansion, while below 50% means contraction.

Although he later allowed that we weren’t in a “real recession,” Leonhardt’s invocation of “the R-word” to describe an individual economic sector was inexcusable. What’s more, the manufacturing sector wasn’t even in the neighborhood of distress, and Leonhardt should have known it. The very first day after his article appeared, ISM’s February 2007 Manufacturing Index came in showing expansion, and did so for the next eight months. The Times has ignored requests that they correct Leonhardt’s error.

It isn’t just manufacturing that has been described as in recession. This Times search on “housing recession” shows that the Old Gray Lady has used that term 25 times since October 2006. Housing is in a very bad slump, but, by definition, it cannot be in a recession.

More recently, presumptive announcements that we’re in a recession — not heading for one, but actually IN one, have come from politicians as high up in the food chain as John McCain and Bill Clinton (or perhaps the reporter covering him, who wrote, “He began the night by discussing the current recession ….”).

If politicians are throwing around the R-word, it’s because the press has been, recklessly and repeatedly. A Google News Search done early Thursday morning covering the past 30 days had 132 hits on just one all too commonly used phrase: “the current recession.”

The Associated Press’s Jeannine Aversa provided perhaps the most egregious preemptive recession declaration on April 5, when, in the wake of March’s weak Employment Situation Report, she wrote:

It’s no longer a question of recession or not. Now it’s how deep and how long.

Reacting to yesterday’s positive GDP report, Aversa acted as if she never wrote those words, didn’t bother to correctly define a recession, and still got in her digs:

The statistic did not meet what economists consider the classic definition of a recession, which is a retraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if modestly.

Give Old Media reporters and naysaying politicians a few days, tops, and they’ll be telling us we’re in a recession all over again. Talking down the economy appears to be their stock in trade these days. Didn’t somebody rip into Dick Cheney for doing that very thing in late 2000?

ADP, for what it’s worth, came in at +10,000 on Wednesday.

The consensus estimate of economists, per this Bloomberg link, written almost as if after-the-fact, is -75,000 jobs and the unemployment rate rising to 5.2%.

The Bureau of Labor Statistics (BLS) report is here, and opens as follows:

Nonfarm payroll employment was little changed in April (-20,000), following job losses that totaled 240,000 in the first 3 months of the year, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The unemployment rate, at 5.0 percent, also was little changed in April. Employment continued to decline in construction, manufacturing, and retail trade, while jobs were added in health care and in professional and technical services.

OK, the headline-making stuff beat expectations by quite a bit, with the unemployment rate going down.

Aside: Seriously, Old Media (and I’m talking to YOU, AP reporters Martin Crutsinger, Jeannine [”It’s no longer a question of recession or not. Now it’s how deep and how long”] Aversa, Ann D’Innocenzio, et al [links are to BizzyBlog searches on their names]), how can an economy with 5.0% unemployment (and falling) and decidedly non-stellar but positive growth, be in recession?

More to follow. …..

(slightly corrected from earlier this morning) The prior-month revisions were pretty small: March’s -80,000 was revised -1,000 to -81,000. February’s -76,000 was revised -7,000 to -83,000. The overall seasonally adjusted job loss was -28,000 (-20 - 1 - 7).

Some notable unemployment-rate changes (based on looking at data in the detailed tables):

• African-Americans - down 0.4% from 9.0% to 8.6%, seasonally adjusted. The raw number (i.e., not seasonally adjusted) is 8.2%, down from 9.0%.
• All Teenagers - down 0.4% to 15.4%, seasonally adjusted (down 2.6% in 3 months). Not seasonally adjusted, it went down 0.5% to 15.0% (down 3.2% in the three months).
• African-American teenagers - down 6.8% to 24.5%, seasonally adjusted (11.2% in 3 months). Not seasonally adjusted, it went down 8.0% to 23.3%. Those figures are near historic lows.

It seems reasonable to believe that these three sets of stats indicate some substitution of less-skilled labor for illegal immigrants who were supposedly “doing jobs citizens won’t do,” but may be finding it tougher to find under-the-table work (or “legal” work that requires stealing someone’s identity or Social Security number-sharing for an illegal to obtain).

A look at the big-picture “raw numbers” — Since I went down this road last month (and ripped into related business coverage), I’d better keep on traveling it.

Remember that all the verbiage you’ll see today about this or that industry “losing jobs” refers to the seasonally adjusted numbers reported by the BLS. Here is what actually happened on the not-seasonally-adjusted ground:

BLS’s best estimate is that 703,000 more real people were actually working at real jobs in April than were in March, and that 1,810,000 more were really doing so in April than in January.

While not as high as 2006 or 2007, and not as high as one would like to see, April’s increase is much closer to the previous two Aprils (within 157,000, on average) than January’s decrease or February’s and March’s increases were to their comparable 2006 and 2007 figures (all three averages were well over 250,000 than 2008). Much more improvement is needed, but some improvement did occur during April.

Here are just a few of a the real-world job-change numbers for April:
- Construction — up 114,000.
- Manufacturing — down 29,000.
- Trade, transportation, and utilities — up 34,000.
- Retail — up 7,400.
- Financial activities — up 12,000.
- Professional and business services — up 203,000.
- Government — down 3,000.

That government number, and the ones for the preceding months, make me question something from earlier this week about ballooning government employment that I’m going to have to find. Update: There has been a revision (today’s) since the USA Today article about government hiring, but as far as I can tell, they got it right (i.e., they used the NOT seasonally adjusted numbers). Update 2: They got the government part right, but the private sector part wrong, using the seasonally adjusted numbers to tell us of 286,000 private-sector jobs lost when there actually a lot more lost (due to January post-Christmas adjustments that occur every year.

This updates the “Supply-Side Stunner” post (at NewsBusters; at BizzyBlog) from Tuesday. The business press has not yet noticed this news.

The last Daily Treasury Statement for April published yesterday shows just how impressive what is probably the supply-side tax cuts’ last hurrah really was:

(Prior-year links: April 30, 2007 Daily Treasury Statement; April 2007 Monthly Treasury Statement.)

A couple of days ago I predicted correctly that withholdings would come in a few points ahead of last year and that corporate income tax payments would be flat year-to-year.

But I was wrong about those not-withheld payments of income and employment taxes (What is listed above as “not withheld” also includes a later and relatively small line item in the Daily Treasury Statement called “individual income taxes.”). I thought they would come in at least 7% higher, and that 15% was “not out of the question.” Well, they came in 16.1% higher.

The significance of this shouldn’t be overlooked. As I noted on Tuesday (bold is mine):

…. this not-withheld category consists mostly of final payments that accompany individual 1040s for 2007, plus first-quarter 2008 estimated payments. The increase may not only reflect that entrepreneurs and the self-employed had pretty decent years in 2007, but that many of them are thinking, in the face of relentless media harping to the contrary, that 2008 will be at least as profitable. Estimated payments are supposed to be 25% of last year’s total tax bill, unless the taxpayer figures that the current year’s tax bill will be lower, in which case they can pay in less. I would think that anyone who could defensibly pay in less, would pay in less.

The fact that April’s not-withhelds were so strong makes a case for believing that the folks on the ground running sole proprietorships and S-Corps (corporations whose profits are passed through to shareholders, who then pay individual income tax on their share of reported profits) believe that the economy isn’t too bad after all.

The not-withheld numbers also show that the incentive effects of President Bush’s 2003 marginal-rate and investment-related tax cuts, contrary to my expectations and those of many others, have survived, at least into early 2008.

Old Media business writers are totally oblivious, as this Google News search for the 30 days ending May 1 on “treasury April receipts” (not in quotes) shows.

David Lawder of Reuters wrote this on Wednesday (bold is mine):

The U.S. Treasury said on Wednesday it will resume issuing 52-week bills after a seven-year break, as budget deficits swell due to slowing revenues and higher spending in a sluggish economy.

At least Lawder mentioned spending. Here’s John Brinsley of Bloomberg (bold is mine):

The U.S. Treasury said it plans to sell one-year bills for the first time in seven years as a weakening economy hurts tax receipts and forces the country deeper into debt.

As you can see, neither writer names the $117 in fiscal stimulus payments being sent in the coming weeks as major influence on the need to borrow.

They’re right, in the sense that April’s revenue gusher probably won’t last. If it doesn’t, it won’t be the “sluggish” or “weakening” economy that causes it. The culprit will be the ominously looming federal tax increases. At some point, and it’s not too far off, the prospect that the most of the 2001 and 2003 tax changes will be undone — something that will automatically begin happening in 2009 (to capital gains and dividends) and 2010-2011 (to almost everything else) unless Congress acts to keep the current tax system in place — will begin to have a dampening effect on investment and growth, which I would otherwise expect to recover nicely in the latter part of this year.

While on the subject: The government is treating the fiscal stimulus payments as negative receipts. This will, in my opinion, skew the numbers Treasury reports in the coming months by artificially reducing reported receipts. Since these payments are not directly-tied refunds of taxes paid (many are getting “rebates” when they paid in no tax, while others who paid lots of tax are getting nothing), I believe the amounts involved should be treated as “spending.” This is why I have segregated the $2.07 billion in checks sent out on Monday, Tuesday, and Wednesday of this week in the chart above.

There is no doubt that April 2008’s receipts, on a direct-comparison basis (i.e., ignoring the stimulus payments) set an all-time record; the only question is by how much. That question will be answered when the Treasury Department releases the May Monthly Treasury Statement on May 12.

Cross-posted at NewsBusters.org.

It’s here.

I will post it Saturday afternoon at BizzyBlog under the title “Positive GDP Report Won’t Stop Media or Pols from Crying ‘Recession.’”