In today's "How's That Voodoonomics Working Out For You" segment, despite considering a 0.4 percent decline in the nation's Gross Domestic Product a calamity when George W. Bush was President, America's media applauded Friday's announcement that the GDP in the second quarter declined by one percent.
Of course, this is not at all surprising, for many of these same outlets cheered when businesses ONLY cut payrolls by 539,000 in April.
As an example of the merriment, here's how the Associated Press's Jeannine Aversa reported the news in her glass is half full piece entitled "US Economy Appears Poised to Start Growing Again":
At long last, the worst recession since World War II appears on the verge of ending.
The economy dipped only slightly in the second quarter of this year — falling at a 1 percent annual pace, better than expected. And many analysts think the economy is starting to grow again in the current quarter, setting up a long-awaited recovery.
Yes, a one percent decline when Obama is in office means happy days are here again.
Yet, when the Commerce Department announced a 0.4 percent decline on October 31, 2001, Aversa saw it as the end of the world as we know it:
The economy, battered by a yearlong slowdown and the jolt of the terror attacks, shrank at a 0.4 percent rate from July through September, a decline that could signal the end to the longest economic expansion in U.S. history.
The drop in the gross domestic product - the total output of goods and services produced in the country - was the biggest since the first quarter of 1991 when the country was in the depths of the last recession, the Commerce Department reported Wednesday.
The weak performance reflected a sharp pullback in spending by consumers, which slowed to the weakest pace in more than eight years, and a continued plunge in investment by businesses in new plants and equipment.
Hmmm. So, down 0.4 percent was a "weak performance" under Bush signaling dark clouds, but down 1.0 percent under Obama is an economy that "dipped only slightly" portending clear skies ahead. Everybody got that? Of course, the AP wasn't the only outlet back then that foresaw storms on the horizon as a result of a 0.4 percent decline in GDP. Check out this November 1, 2001, editorial from the New York Times:
Hmmm. So, down 0.4 percent was a "weak performance" under Bush signaling dark clouds, but down 1.0 percent under Obama is an economy that "dipped only slightly" portending clear skies ahead.
Everybody got that?
Of course, the AP wasn't the only outlet back then that foresaw storms on the horizon as a result of a 0.4 percent decline in GDP. Check out this November 1, 2001, editorial from the New York Times:
Gross domestic product shrank by 0.4 percent in the third quarter of this year. That performance was better than most analysts expected, but still the worst in a decade. The economy is probably contracting even faster now, and the recovery many had hoped to see by year's end is not likely to arrive until well into 2002.
During most of this year, consumers were the engine that propelled the economy while businesses drew down inventories and pared unneeded output. Yet even before Sept. 11 that lone pillar had started to crumble. Personal bankruptcies reportedly jumped in August. Late payments and write-offs of credit card debt had been rising for seven months.
The trend will almost certainly continue, since the terrorist attacks alone may have drained as many as 500,000 jobs from the economy. Companies not directly affected by Sept. 11, including almost all the telecom giants, have also let thousands of workers go. Claims for unemployment benefits have reached levels not seen since 1991.
Nice call, guys. After all, it turned out that recession actually ended that November -- likely within days of both these bearish articles being published!!! -- and the economy actually grew by 1.4 percent in the fourth quarter of 2001, and 3.5 percent in the first quarter of 2002.
That aside, the better-than-expected numbers reported Friday were certainly cause for some optimism, but such should be guarded given the history of such things.
After all, if this is indeed the worst economic slowdown since the Great Depression, shouldn't it continue to behave as such?
Consider that in the first recession of the '70s, there were several false starts before a real recovery began.
That recession started in the third quarter of 1973, but actually saw GDP growth in that year's fourth quarter, as well as the second quarter of 1974. Yet, the next expansion didn't officially start until the second quarter of 1975.
And, there was a similar pattern in that recession of an easing in the declination rate which ended up NOT signaling a recovery. The third quarter of '74 saw a 3.9 percent drop followed by a much smaller 1.6 percent decline in the fourth quarter.
Using today's logic, the first quarter of '75 should have been a continued improvement and maybe even have shown some growth. Not so, for the economy plunged by 4.8 percent that quarter, its worst performance of the entire recession.
Maybe most importantly, unemployment which peaked at 9.0 percent didn't begin to ease until June of '75.
The '80s recession also saw similar fits and starts to GDP growth before the recovery really began.
With this in mind, media might want to be more careful about jumping on the President's we've turned the corner bandwagon.