Brian Wesbury, whose writings I have quoted often, is at it again, puncturing the economic gloom with reality-based analysis. Since his job is to provide useful info for the investor-clients at First Trust, creating unrealized hype is not in his best interest.
Wesbury is predicting a stunning improvement in the economy's growth rate (PDF; HT Political Calculations) when Uncle Sam's Bureau of Economic Analysis (BEA) releases second quarter Gross Domestic Product (GDP) information next week:
Growth Was Solid in Q2
Late next week the government will release initial estimates of real economic activity in the second quarter. Not long ago, in early April, when the quarter was just beginning, the consensus forecast for Q2 2008 real GDP growth was 0.0%, with as many economists predicting contraction as were predicting growth.
Now, three months later, the consensus is up to 2.2%. And no surprise - we are forecasting a 3% growth rate, more bullish than almost any other economist.
Wow. If this result occurs, it's going to be really tempting for Old Media to exclusively credit the economic stimulus checks for the improvement. But that's baloney; those were factored into the earlier lower estimates.
I'm not as sold on 3% as Wesbury, despite the detailed walkthrough he's done, but I believe that the final result (i.e., after the BEA's August and September revisions) won't come in any lower than the 2.2% consensus he refers to.
By the way, Wesbury says that the 2.2% consensus forecast came from Bloomberg. If you can find it in any media report, or even at Bloomberg, you're a better searcher than I. This Bloomberg report from Monday has a consensus prediction from "earlier this month" of 1.5%. Former CNN political commentator Al Hunt, who is now Bloomberg's executive Washington editor, wouldn't be holding back on us, would he?
Wesbury then rips into the climate of economic negativism -- which has been, of course, largely created by Old Media:
Many say it feels like a recession and predict negative growth. Then the data arrive, and show growth. The pessimists then say it doesn’t matter because it’s “old” news. After all, the quarter is already over and the evidence of recession will be clear by next quarter, they say.
Eventually, those forecasting recession are going to run out of time. The clock is already ticking and the economy remains resilient. Construction and auto related layoffs account for more than all the job losses in the past year. Initial unemployment claims remain below 400,000 and the financial sector appears to be bottoming.
If second quarter GDP growth comes in mediocre (it's important to remember that while 2.2% isn't recessionary, it's nothing special) or even decent, you would think that presumptive Democratic nominee Barack Obama might be embarrassed about, and apologize for, his claim less than two weeks ago (covered at NewsBusters; at BizzyBlog) that there is “little doubt we’ve moved into recession." After all, politicians who place country before party wouldn't go negative about the economy without basis, would they?
(Aside: Hard to imagine that the Obamessiah's predictive powers are less than perfect, isn't it?)
Don't hold your breath. As a member of the POR (Pelosi-Obama-Reid) Economy triumvirate that is proactively attempting to inflict a recession on us by keeping oil and gas prices artificially high and creating expectations of huge tax increases starting next year, Wesbury's assessment means that Obama will just have to try harder to talk -- and take -- the economy down.
Cross-posted with slight revisions at BizzyBlog.com.