New Data Refute Old Media's Ongoing Recession Obsession

Photo of Tom Blumer.
By Tom Blumer (Bio | Archive)
December 5, 2007 - 13:17 ET

Four reports today threw more cold water on Old Media's "The Recession Is Coming, The Recession Is Coming" chorus.

First, the Bureau of Labor Statistics (BLS) issued its revised Productivity and Costs Report for the third quarter, saying:

The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised productivity data--as measured by output per hour of all persons--for the third quarter of 2007. The seasonally adjusted annual rates of productivity growth in the third quarter were:

6.7 percent in the business sector and
6.3 percent in the nonfarm business sector.

In both sectors, changes in productivity are higher than the preliminary estimates published November 7, and represent the largest productivity gains since the third quarter of 2003.

Refuting Old Media's recent claims that the third quarter was fine, but that all good news is old news, the Institute for Supply Management's (ISM's) Non-Manufacturing report for November came in with an "expansion" reading of 54.1% (any reading above 50% indicates expansion). Though the reading is lower than last month's 55.8%, and lower than expectations that it would come in at 54.8%, it's still comfortably in expansion mode, and for the 56th straight month.

Here's something you won't see reported about the ISM's numbers: They're almost as good as those seen in the third quarter, when GDP grew by 4.9% (pending final adjustment in December). Looking at both the ISM Manufacturing and Non-Manufacturing indices, here is how the third quarter and fourth quarter so far compare, with Manufacturing and Non-Manufacturing weighted 15% and 85%, respectively, to approximate their contributions to the economy:

ISM2Qand3QtoNov2007

Third, new orders jumped by 0.5%, "unexpectedly" beating predictions of flatness.

Fourth, though its reliability is in my opinion more than a little suspect, ADP's National Employment Report came in with an estimate of 189,000 new non-farm private-sector jobs during November, and an upward revision of October's number.

With reported results like these, a recession would appear to be quite distant -- which of course explains why Google News search shortly before noon on December 5 on the word "recession" (limited to Dec. 4 and 5 for news sources in the US) returns 15,350 results (/sarcasm).

Cross-posted at BizzyBlog.com.

—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters


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"The seasonally adjusted

December 5, 2007 - 13:29 ET by TE

"The seasonally adjusted annual rates of productivity growth in the third quarter were:

- 6.7 percent in the business sector and
- 6.3 percent in the nonfarm business sector."

Minor point, but this post makes it appear that productivity DECLINED by 6.7 percent in the business sector and DECLINED by 6.3 percent in the nonfarm business sector.  Maybe the "- 6.7" and "- 6.3" should be replaced with "6.7" and "6.3" or maybe "+6.7" and "+6.3".

Those dashes at the

December 5, 2007 - 13:37 ET by dscott

Those dashes at the beginning of a sentence are called bullet points.  but I see it could be mistaken for a minus sign.

Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity. dscott's corollary: The line between malice and stupidity is called depraved indifference.

FIXED

December 5, 2007 - 13:38 ET by Tom Blumer

Thanks.

But of course you know

December 5, 2007 - 13:55 ET by dscott

But of course you know increasing productivity can be spun as being a bad thing.  The greater the productivity, the less employees needed to produce the product.  Hence, rising productivity is a precurser to higher unemployment since businesses don't need as many workers to get the job done. Just look at the auto manufacturing sector, down 17% since 2000. <sarcasm>

The 6.7% (that .4% above 6.3%) in the business sector which includes farms suggests that agriculture is finding ways to adjust to using less workers to pick the crops.  Shocking, we don't need as many illegals to pick crops. <sarcasm>  Here's a new slogan:  Automation, taking jobs that potential new voters, I mean, illegals could do.

Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity. dscott's corollary: The line between malice and stupidity is called depraved indifference.

The Employment Situation

December 5, 2007 - 13:35 ET by dscott

The Employment Situation for November 2007 is scheduled to be released on Friday, December 7, at 8:30 A.M. (EST). http://www.bls.gov/news.release/empsit.nr0.htm  

So what is the expectation for unemployment???  Obviously the MSM is cheering for higher figures.

Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity. dscott's corollary: The line between malice and stupidity is called depraved indifference.

recession risk

December 5, 2007 - 13:54 ET by johnG

there still remains recession risk. everyone knew that q3 had good growth, and productivity is better than expected because cost of labor was lower than expected. GDP growth is expected to drop to around 1% for q4, thus there is solid case for recession fears.

this is last quarter's productivity number. last time i checked recession risk is gauged on LEADING indicators, not LAGGING indicators like this one.

though today's numbers do allow more breathing room for another rate cut by ben b. the economy should be okay probably due to the fed being proactive, not because of last quarter's productivity.

Yes and no on the q3

December 5, 2007 - 14:46 ET by dscott

Yes and no on the q3 predicting the q4.  You are right that past performance is not a guarantee of future return in any business venture, however, a drop from an annual 4.9% rate to a negative number in the space of three months is highly improbable regardless of the Fed's actions.  The worst expected reduction from such a rate decrease would be in the 2 to 3% range.  Historically, do you know of any time period where the economy slammed into reverse over a 3 month time period from such a high value?  Reversals do happen but not that instantaneously.

edit - I take that back, they can happen quickly http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=1&FirstYear=2006&LastYear=2007&Freq=Qtr set chart to dates desired, see 2nd qtr 2000 to 3rd qtr 2000, a sudden reversal from 6.4% annualized to -0.5% annualized.  During the Clinton admin no less...

Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity. dscott's corollary: The line between malice and stupidity is called depraved indifference.

well we can't really slip

December 5, 2007 - 14:57 ET by johnG

well we can't really slip into a recession that quickly because the definition (loose def'n) is two consecutive quarters of negative gdp growth. we're not going to be in recession by q1 2008, but the recession fears come from thought that q4 2007 could just be the tip of the iceberg and that the economy won't recover in 2008.

yes during the clinton admin they had that one negative quarter, and then bush oversaw two negative quarters during the "recession" of 2001. but honestly attributing economic performance to presidents is pointless. business cycles and elections cycles aren't the same.

Here's a headline

December 5, 2007 - 13:55 ET by motherbelt

Here's a headline they can use:

"Productivity Up, Despite Sluggish Economy"

LOL

Or...

December 5, 2007 - 15:09 ET by mattm

Productivity Gap Widens

Minorities and women...

December 5, 2007 - 15:18 ET by Prester John

.....hardest hit.

Tom, the "old media" is

December 5, 2007 - 14:04 ET by JAB

Tom, the "old media" is right about the recession, it's just their timing that's off. Wait until we get a DimocRat controlled W.H., Congress & Senate. Then we'll see a recession (or depression) and it will all be Bush's fault -- not their's.

"Too bad Ignorance isn't painful..."

MSM does not control Stock Market

December 5, 2007 - 14:45 ET by JayTee

The Stock market doesn't believe the MSM, the Stock market looks at the REAL numbers, and REAL details, and do their own Translations.  The MSM is ignored by professional money managers, unless the MSM is wrong and Joe Citizen believes the MSM propaganda, and sells low to the delight of the Money managers, who are all too willing to take advantage of those who believe the MSM and react accordingly. 

When the MSM publishses bad news, and then the Stock MKT (like today) goes up 175 or so, guess who I don't beleive ?     

What good is a Free Press, if it is a False Press ?   David Foote  GoE

Milton Friedman once said

December 5, 2007 - 23:55 ET by MikeB

Milton Friedman once said of John Galbraith he had "predicted nine of the last three recessions."  The MSM has bettered that record.  They have reported at least 12 of the last zero recessions.  In spite of continuing productivity increases, continuing increases in the number of jobs in non-agricultural sectors, continuing decreases in unemployment numbers, continued increases in GDP  and real income, we are in the worst economy since the Great Depression.  It's not that the economy is depressed, it's that the LibMedia are greatly delusional, and in my opinion, suffering from BDS.  Certainly, when it comes to the economy, they are full of BS. 

"A communist is someone who reads Marx.  An anti-communist is someone who understands Marx."  Ronald Reagan