On Thursday, the government reported that the nation's economy turned in yet another quarter of poor economic performance, estimating that its gross domestic product grew at an annual rate of 1.5 percent in the third quarter.
The business press almost universally downplayed the news, and told readers that the fourth quarter will be better. No one talked about how much the tepid growth of the past six-plus years since the recession officially ended has been sacrificed in the name of misguided and dangerous Keynesian stimulus. As is so often the case, an editorial at Investor's Business Daily did that, performing a job the press has consistently refused to do.
The chorus actually began before the release of Thursday morning's report. Wednesday evening, as I noted in a NewsBusters post, the Associated Press's Martin Crutsinger engaged in predictable battlespace preparation by telling readers to expect a "subpar" 1.7 percent, but that the economy would then be "poised to rise again." He cited the fourth-quarter predictions of Macroeconomic Advisers and Moody's Mark Zandi for annualized growth of 2.7 percent and 3.5 percent, respectively.
Thursday morning, after the report's release, Crutsinger insisted that "most economists think growth has been strengthening since the July-September quarter ended." But he then began the now-tired ritual of gradually ramping down expectations, writing that "Many (analysts) predict that growth in the October-December quarter will rebound to around a 2.5 percent annual rate."
The story headline at Bloomberg's Thursday morning story by Michelle Jamrisko was the excuse that "Inventory Correction Masks Resilient Demand in U.S. GDP Report." Well, the reduction, which reduced reported GDP by 1.44 points, has been a long time coming, because manufacturers, wholesalers and retailers have built inventories to unsustainable levels. Given that no one expects truly robust growth to return any time soon, current inventory levels are still too high, and need to come down even more — or businesses will be stuck with a lot of stuff they either can't sell or will have to almost give away at fire-sale prices.
Jamrisko found analysts who claimed that the third quarter saw "buoyant consumer and business spending" they expect to continue. First, it's not all that "buoyant." The 2.19-point contribution of personal consumption expenditures was middling by historical standards, and the combined 0.47 points kicked in by fixed residential and nonresidential investment was far below what we would be seeing in a genuinely healthy economy, and even below most of the quarterly performances since the recession ended. As to the sustainability of consumer spending — or even the sustainability of current third-quarter figures after second- and third-release revisions — recent consumer confidence reports are showing fading enthusiasm, including a surprising reduction in motivation to buy new cars, one of the few consistent consumer "spending" bright spots ("spending" is in quotes because consumers are borrowing at dangerously high levels to "purchase" their cars, and stretching their loans to an average of over 6-1/2 years).
Over at Reuters, Lucia Mutikani also cited "solid domestic demand" and "strong domestic fundamentals," even claiming that "consumers save(d) the day."
If that's the case, why is the prediction the AP's Crutsinger is carrying a middling 2.5 percent, and why is the Atlanta branch of the Federal Reserve, which predicted 1.1 percent for the third quarter and may yet be proven right, predicting that same 2.5 percent? Sadly, the answer is that the press expects Americans to accept a mediocre "new normal."
Very few people appreciate how much weak growth — growth consistently below what the Obama administration itself has predicted — has cost the average American since the recession. Investor's Business Daily has, and it's not for the faint of heart:
Obama Fails Again To Deliver On His Economic Promises
... The third-quarter reading is just the latest example of the disappointments that have become a fixture of this administration. Every year starts with big promises about growth, every indicator a sign of prosperity just around the corner. His policies are working, the president insists. But the economy just slogs along.
The best example of Obama's failure can be found by comparing where he thought his policies would take the nation to where we actually ended up.
As the nearby tables show, the economy is about $1.4 trillion smaller than Obama forecast when he got into office. The debt-to-GDP ratio — now 75% and rising — was supposed to be down to 68.5% by now, and falling.
Unemployment is only now down to where Obama forecast, but only because so many people have dropped out of the labor force. Without that dramatic loss of workers, the jobless rate would be close to 10%.
Obama likes to excuse his lousy economic record by saying that things were far worse than he thought they were when he took over. Or that obstructionist Republicans in Congress have mucked things up. But check the record.
Every year, the Obama administration predicted strong growth based on current policies, and every year it failed to materialize. Every. Single. Year.
... The problem is that this underperforming growth problem is compounding itself, creating an increasingly large growth gap.
... Blame for this rests squarely with Obama. He's been given pretty much everything he wanted over the past seven years — a Keynesian stimulus, ObamaCare, tax hikes on the "rich," a massive increase in regulations. But none of it has produced the growth he promised.
Here are those tables — brace yourself:
The $1.4 trillion in growth below what was promised — and which would very likely have occurred with rational economic policies — works out to about $4,300 for every man, woman and child in the nation. A large portion of that, if achieved, would certainly have seen its way into workers' paychecks by now. But it hasn't happened, which largely explains why household incomes are still below where they were in 2007, before the recession began.
The press never reports the true cost of weak growth, because weak growth under a Democratic presidential administration is an acceptable condition. Readers can be assured that if we saw such a long-term record of weak growth in a Republican or conservative presidential administration, the press would be complaining quite vociferously, while constantly warning that a recession is just around the corner.
Cross-posted at BizzyBlog.com.
