At the Associated Press today, Martin Crutsinger's coverage of the Census Bureau's March Factory Orders report admitted that a leading economic forecasting firm currently believes that the economy will grow at an annualized rate of just 1.9 percent in the second quarter.
Despite the fact that just about everyone who is anyone had until very recently been saying that the figure will be 3 percent or more, Crutsinger wrote once that achieving that mediocre 1.9 percent result would constitute a "rebound," and another time that it would be "a significant rebound." So much for genuinely great expectations.
Crutsinger also appears to have sanitized his post-release coverage compared to the pre-release AP writeup which was likely his found at CNBC. Although both reports described the first quarter's annualized growth of 0.2 percent reported last week as "meager," his earlier report separately characterized it is as "barely discernible." Those words disappeared in his post-release report.
Crutsinger additionally left many readers believing that even though orders have seriously slumped since last summer, they are still above where they were a year ago. That isn't so. In fact, the volume of both orders and shipments during the first quarter of 2015 is lower than figures reported two years ago.
Here are key paragraphs from Crutsinger's 10:20 a.m. post-release coverage (bolds are mine):
US FACTORY ORDERS RISE IN MARCH FOR FIRST TIME IN 8 MONTHS
Orders to U.S. factories rose in March for the first time since last July, breaking a long stretch of weakness in manufacturing.
Orders increased 2.1 percent following seven monthly declines, the Commerce Department reported Monday. And in further good news, orders in a key category that tracks business investment plans eked out a 0.1 percent rise. It was the first advance in this category since last August. (0.1 percent is "good news" now? Talk about lowering the bar — Ed.)
Economists are hoping that U.S. manufacturing is beginning to emerge from a long soft patch, bolstered by stronger domestic demand that will offset ongoing weakness in exports.
... The overall increase was the first positive number since a 10.5 percent increase last July. The strength in March was led by a surge in demand for computers and the volatile category of commercial aircraft.
... The government reported last week that the overall economy, as measured by the gross domestic product, expanded by a meager 0.2 percent in the January-March quarter as a harsh winter, a rising trade deficit and weaker business investment all held back growth.
Economists believe growth will rebound in the April-June quarter, helped by stronger job growth that is expected to spur consumer spending. Auto sales rose in April, led by strong demand for small and midsize SUVs.
Economists at Macroeconomic Advisors are looking for the GDP, the country's total output of goods and services, to grow at a 1.9 percent rate in the second quarter, a significant rebound from the first three months.
Other analysts are more optimistic.
Crutsinger's "optimistic" analyst still believes that we're going to see an annualized 3.5 percent in the second quarter. Though he could conceivably be right, it's quite interesting that the AP reporter went to him but failed to cite the Atlanta Federal Reserve, whose first-quarter prediction of 0.1 percent was one of a very few which got very close to the actual (but subject to revision) 0.2 percent. The Atlanta Fed's current second quarter prediction of 0.8 percent deserved equal weight.
As to impressions left, Crutsinger cited July's 10.5 percent increase, which will likely cause many readers to believe that the decreases of the past several months still leave orders at or above where they were before that blockbuster month.
We should be so lucky, but we aren't (Source data: orders; shipments):
There's a real mystery Crutsinger and others in the business press at the AP and elsewhere should be investigating, namely the follwing: How can reported economic growth still be positive while the roughly one-third of GDP which runs through the manufacturing orders and shipments process (about $5.8 trillion out of $17.7 trillion) has been turning in such sharply negative results — even before considering inflation — compared to those seen two quarters ago, a year ago, and even two years ago?
Cross-posted at BizzyBlog.com.
