Taking a cue from the Associated Press's Martin Crutsinger in March of last year, two Los Angeles Times reporters told readers on Monday that the economy is about to complete a seventh year of expansion. No it's not, at least not if historical benchmarks for determining expansions are consistently and properly heeded.
Reporters Jim Puzzanghera and Don Lee couldn't even keep their own standards for expansion straight, as seen in this damning sentence: "The economy has been growing for 84 months, a stretch that is well above the 58-month average post-World War II expansion." No it hasn't, and no it isn't.
Since a quarter has three months, the just-cited sentence is automatically false if one can find a post-recession quarter during which the nation's gross domestic product showed a contraction.
It turns out that there have been two such quarters, as seen in the red boxes below:
The Times reporters' sentence should be revised to read as follows: "After the recession officially ended in the second quarter of 2009, the economy grew for 18 months before contracting during the first quarter of 2011. It then grew during the next 33 months before contracting once again during the first quarter of 2014. It has since grown during the past 24 months."
The error just explained appeared in Paragraph 6 of the pair's report. It renders their headline and opening paragraph obviously false (HT longtime reader and commenter Gary Hall):
The economic recovery just turned 7, and here's why it feels so weak
Though you’d never know it from listening to the presidential candidates, the current U.S. economic expansion is the fourth-longest since the end of World War II.
No it's not.
As just seen, the longest positive quarterly streak seen since the recession ended is 33 months, or 11 quarters.
Let's compare that to previous expansions, as a I did in March of last year when the AP's Crutsinger tried to pull the same deceptive stunt:
... consecutive quarters of economic growth (is) the measurement of post-downturn economic consistency commonly used to determine the durability of recoveries since at the least the 1960s ...:
- 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).
So the Obama-era "recovery's" longest quarterly streak of 11 is less than half as long as the Bush 43 streak, barely one-fourth of the Bush 41-Clinton streak, barely one-third of the Reagan-Bush 41 streak, and less than one-third of the Kennedy-Johnson era streak.
A very predictable party who should (and I believe does) know better put in an appearance in the Los Angeles Times report. Why, it's none other than the painfully familiar maximum 2015 Hillary Clinton for President contributor (not disclosed, of course) and head economy cheerleader Mark Zandi of Moody's Analytics:
... Bottom line: The recession risk will remain low for the next couple of years, economists said.
“The odds are high this is going to be rivaling the longest expansion we’ve ever enjoyed,” said Mark Zandi, chief economist at Moody’s Analytics.
... Zandi also thinks inflation could soon exceed the Fed’s preferred level. But because there’s been so little inflation in recent years, that might not be so bad -- particularly if it reflects higher wage growth, he said.
He anticipates the Fed will move slowly on interest rate hikes, even if inflation accelerates quickly.
“I think the Fed is happy to … let the economy run hot for a while,” Zandi said.
... “The economy’s very close to full employment,” Zandi said.
But wages have been slow to rise. And economists said the labor market won’t be fully healed until workers see their paychecks growing substantially.
Taking the bolded items in the excerpt one by one:
- Zandi's "longest expansion" claim is a lie by standards used since at least the 1950s, when, as seen above, there have been negative quarters during the Obama years. To demonstrate how absurd Zandi's contention is, one could (dishonestly) describe the expansion which began during Bush 41 in 1992 as a 16-year expansion which lasted through 2007, because calendar year GDP was positive in every year during that period. The economy even grew during the National Bureau of Economic Research-declared recession of 2001, turning in a +1.0 percent performance, even though that year had two non-consecutive negative quarters. By Zandi's "logic," expansions can continue even through recessions! We're not that stupid, Mark.
- As to the economy "running hot," are you kidding? The last time the economy generated more than a couple of quarters of genuine "heat" was during the eight quarters which ended in March 2005, during which quarterly growth averaged 4.0 percent.
- If the economy is so close to "full employment," why have wages been "so slow to rise"? Answer: There still has to be plenty of slack in the labor market, despite the 4.7 percent reported unemployment rate. How do we know? The labor force participation rate has fallen 0.4 points in the past two months, and is at levels last seen during the late-1970s. Despite Zandi's claim made during last week's ADP conference call, Baby Boomer retirements do not sufficiently explain away the decline of over three percentage points in this metric during the Obama era.
So two Times reporters peddled economic fiction the day before the California primary, and pushed it even after Friday's awful employment report.
Oh, and in case readers are wondering — most probably aren't because, after all, this is the LA Times, which never has a discouraging word to say about a Democrat politician unless they've been indicted or proven to be corrupt (and even then the admissions are very grudging) — the following words and terms are nowhere to be found in Puzzanghera's and Lee's dispatch: "Obama," "White House" "income," and any form of the word "Democrat."
Cross-posted at BizzyBlog.com.
