GDP Media Coverage, Part 3: AP Pair Pins Prime Blame on Gas Prices, Finally Cites Uncertainty -- Over Debt Ceiling
The AP's coverage of the U.S. economy late Friday focused on high gas prices as the dominant, uh, driver of this year's anemic growth both visually and in its text.
As will be seen after the jump, the graphic at the AP's national site is of a gas price sign. The final sentence in the caption of the full-size version reads "High gas prices and scant income gains forced Americans to sharply pull back on spending."
The underlying report by Christopher Rugaber and Paul Wiseman predictably mentioned gas prices first and foremost, tagged debt-ceiling negotiations as a suddenly important contributor to economic uncertainty (where have they been while President Obama, his cabinet, his czars, and his hyperactive regulators have been injecting uncertainty in megadoses during the past two years?), and relayed Ben Bernanke's months-old warning that cutting back too much on government spending would hinder economic growth:
Here are a few later paragraphs from the pair's report:
... Since 1950, year-to-year growth has dipped below 2 percent 12 times. Ten of those times, the economy was already in recession or soon fell into one, says Mark Vitner, senior economist at Wells Fargo Securities.
... High gasoline prices leave people with less money to spend on other goods and services. And not all spending on gas contributes to the U.S. economy because some of the money goes to oil-producing countries. GDP figures are also inflation-adjusted, so spending $1 more for a gallon doesn't mean $1 of additional help to the economy.
... Add to those problems the uncertainty fanned by the political stalemate in Washington, with Republicans refusing to raise the federal government's $14.3 trillion borrowing limit unless Democrats agree to deep federal spending cuts on the GOP's terms.
... Federal Reserve Chairman Ben Bernanke and other economists have warned Congress against cutting too much too soon because the economy remains so fragile.
Two points need to be made about the AP pair's cite of Ben "Electronic Printing Press" Bernanke and protecting the supposed sanctity of government spending.
First, it would appear that we don't have much to worry about on cutting spending "too much too soon," given that the GOP bill which passed the House yesterday reportedly "cuts" (i.e., barely reduces future spending growth) only $22 billion from fiscal 2012 -- less than two-thirds of 1% of anticipated spending.
Second, maybe Chris and Paul should look at the chart which follows and ask why it shows that the private sector is still smaller than it was when the recession began, whether you peg it as beginning in the third quarter of 2008, as the "normal person" definition of recession would dictate, or in December 2007, when the National Bureau of Economic Research (wrongly) claims it began (Source: Table 3B at yesterday full GDP report; all figures are in billions):
Meanwhile the federal government's portion of GDP (representing purchases of goods and services, not welfare or other entitlement payments) has grown by double digits under either definition.
Guys, maybe, just maybe, it's the explosion in federal government spending -- relatively inefficient and wasteful in comparison to private-sector spending and investment -- which has caused overall economic growth to be so anemic, especially given how much of it has been spent to instill regulatory and other fear and fright in businesspeople, entrepreneurs and investors. It would be nice if you'd consider reporting that contention in the story. There's no shortage of people you could find who would gladly tell you that.
Cross-posted at BizzyBlog.com.