As yours truly noted in several posts at my home blog on Wednesday and at NewsBusters on Friday and Saturday, the torrent of pre-Thanksgiving "getaway day" economic data was largely disappointing.
That didn't stop the Associated Press's Chris Rugaber from pushing the "All is well" meme late Wednesday afternoon, declaring, contrary to what anyone's eyes could see, that "the fundamentals of the U.S. economy remain solid," that "Consumers appear relatively confident in the economy," and that "Americans are unleashing pent-up demand for big-ticket items such as homes and cars."
In a Friday post on consumer spending, I noted that it increased in October by only a seasonally adjusted 0.1 percent, and that prior months were revised downward so significantly that October's total spending was lower than September's originally reported figure. The same government report indicated that personal incomes have gone up nicely during the past several months, but given that real household incomes are nowhere near recovered from their pre-recession peak, it shouldn't be surprising that consumers appear to be choosing to save the extra money instead of spending it. The related dispatch filed by the AP's Martin Crutsinger alternated between calling the spending increases "tiny," "modest," and "weak."
Despite this, Rugaber soldiered on with false optimism, using previous data as a crutch:
In the second and third quarters, consumer spending topped 3 percent, a historically robust level.
Taking that claim literally, he's obviously wrong:
The total of the listed increases for April through September is only 1.6 percent. That annualizes to over 3 percent, but that's not what Rugaber wrote. That "oversight" conveniently misleads low-information readers.
What has happened during the past five months is far more relevant. As seen above, the reported increases from June through October total only 0.8 percent, which annualizes to 1.9 percent. The actual dollar amounts of the underlying increases annualize to 2.0 percent. That level of increase is not "robust." A review of U.S. economic history in Gross Domestic Product statistics indicates that real consumer spending has grown annually by less than 2 percent only 13 times in the past 68 years — and three of those instances (2010, 2012, and 2013) have occurred in the past five years of the economy's alleged "recovery." Rugaber was clearly trying to force the narrative to fit into his positive template. Nice try, pal. No sale.
On the production side of the economic equation, Wednesday's government report on durable goods saw seasonally adjusted improvement in orders but a continued decline in shipments. As I noted at my home blog, October's figures for orders and shipments both trailed those seen in October 2014; the orders decline was the seventh straight monthly year-over-year drop.
Yet Rugaber asserted the following, in Ministry of Truth fashion:
The steady consumer and business demand in the United States is powering the economy through economic pressures from overseas, which jolted financial markets during August and September and raised doubts about global growth.
Rugaber also vastly exaggerated the momentum on the housing front:
Sales of new homes jumped last month and have increased 15.7 percent through the first 10 months of 2015.
Home sales have been bolstered by strong hiring and low mortgage rates. Sales of existing homes are on track to reach their highest level since 2007, even though rising prices are sidelining many potential buyers.
Points:
- As I observed at NewsBusters Saturday morning in reviewing a related report by the AP's Josh Boak, "The seasonally adjusted annual rate of 495,000 units ... was the fourth-lowest monthly level seen this year, even well below the 521,000 and 545,000 reported in the supposedly unprecedentedly awful winter months of January and February, respectively."
- In that post, I also observed that even with this year's 15.7 percent increase, "current levels are at best about 70 percent of what one would expect in a pre-'new normal' healthy market."
- As to "rising prices sidelining potential buyers," that's because incomes haven't kept up, and a few months of decent improvement in incomes won't make up for their horrid decline followed by stagnation during the past seven years. As to his comparison to 2007, that's nice, but current levels are still only about 70 percent of those seen a decade ago.
No one should buy Rugaber's contention that "Consumers appear relatively confident in the economy." It's cherry-picked nonsense.
Later in his report, after citing a small increase in the University of Michigan Consumer Sentiment Index, the AP reporter admitted that the Conference Board's Consumer Confidence Index for November dropped steeply (and, according to Bloomberg, "unexpectedly") from the previous month to a level last seen over a year ago. As I noted on Wednesday, "Expectations were that confidence would increase from October’s value of 99.1 to between 99.6 and 101.0, not drop like a rock in just one month by almost 9 percent to 90.4." As one might predict, Rugaber's colleague Boak reacted to this news Wednesday by claiming that it had occurred despite an economy which he contended "has strengthened by many measures." Though he eagerly cited a Gallup survey's prediction that "Americans plan to spend $830 on holiday shopping this winter - the most since 2007," he failed to note that Gallup's primary consumer confidence survey went negative in March, and has seriously deteriorated since then.
As to Rugaber's observation about pent-up demand for new vehicles, Americans are typically buying them by taking out loans with terms of 6-1/2 years or longer. Dealers are approving an unprecedentedly high percentage of buyers with weak or poor credit. The dollar amount of vehicle loans has blasted through all previous records.
None of the aforementioned "fundamentals" are "sound," leaving Rugaber one plausible contention: "solid job gains" Well, October was solid, but everyone agrees that August and September weren't. Whether October was a positive blip primarily caused by retailers and temp agencies hiring people early to get ready for the spread-out November and December Christmas shopping season and year-end business-related work, or the beginning of a long stretch of hiring which will draw some of the millions of potential workers remaining stubbornly on the sidelines back into the workforce, remains to be seen.
One thing should be obvious: Contentions by Rugaber and his AP colleagues that "all is well" are premature at best, and delusional at worst.
Cross-posted at BizzyBlog.com.
