After yesterday's government report on economic growth reduced the fourth quarter's originally estimated increase in gross domestic product from an annualized 2.6 percent to 2.2 percent, you just knew that the Associated Press, aka the Administration's Press, would try to ride to the rescue.
Late Friday afternoon, the AP's Martin Crutsinger gamely tried to concoct five reasons why we shouldn't worry our pretty little heads over a growth figure which confirms that the worst post-World War II recovery on record continues to be the worst post-World War II recovery on record. He only came up with four highly questionable reasons, while pretending he still had five (bolds and numbered tags are mine; I also numbered the reporter's reasons):
5 REASONS US ECONOMY IS STRONGER THAN Q4 GDP SUGGESTS
The U.S. economy grew at a modest annual rate of 2.2 percent in the fourth quarter, less than half the third quarter's torrid 5 percent rate and weaker than the government first reported.
While the sharp slowdown seems troubling on the surface, economists say [1] it's actually nothing to worry about. They remain optimistic that the country is finally emerging from years of sub-par activity and is on course this year for the strongest growth in a decade. [2]
Here are five reasons why Friday's gross domestic product report showed that the economy is doing just fine:
1. REALISTIC GROWTH
The sizzling growth rate in the July-September quarter was never going to last. One-time factors, such as a 16 percent surge in federal defense spending, fueled the strongest acceleration in almost a dozen years. The third quarter growth followed a 4.6 percent jump in the second quarter, which was also misleading. [3]
2. CONSUMER STILL KING
The centerpiece of the fourth quarter's growth was consumer spending, which expanded at a 4.2 percent rate. [4]
... 3. BUSINESS SPENDING
... 4. JOB GROWTH
While GDP growth slowed in the fourth quarter, the job market was on a roll. ... The combination of more jobs and rising salaries is likely to fuel strong consumer spending this year. [5]
5. THE ROAD AHEAD
To be sure, not all the signals are flashing green. [6]
Notes:
[1] — Would that be "all experts," Marty, or just the ones you like to contact and quote? He certainly makes it appear as if there's unanimity. But of course, there's not.
[2] — If the "strongest growth in a decade somehow happens this year, it will be because 9 of the 10 years in that decade occurred either while Democrats controlled Congress, Barack Obama was in the White House or both. GDP during the most recent eight years has represented the worst such stretch in 62 years.
[3] — If readers are having a hard time remembering anyone at AP calling second- or third-quarter growth "misleading" at the time the related reports were released, they're not alone. I sure don't recall it.
[4] — The consumer spending item is troubling. December consumer spending reported by the Census Bureau fell by 0.3 percent. It still strains belief that October and November were wonderful enough to make up for that with such a positive result.
[5] — Except that the evidene of rising incomes is sparse. As noted here at Sentier Research, household income finally rose in a statistically significant manner for the first time in quite a while in December, finally got back to the same level as it was in October 2009, and is still about 4 percent below its prerecession peak.
[6] — The ROAD AHEAD is not a reason, becasue Crutsinger identified problematic areas — trade and housing — and no cheery ones. Additionally, posts at Zero Hedge yesterday indicate that consumer sentiment has shifted downward and that the February Chicago Purchasing Managers Index "crashed."
So the AP reporter really only came up with four not particularly strong reasons. But AP is apparently determined to convince readers who don't peruse his entire report that there are five. It sounds like someone had a preconceived notion about what they were going to say — or were told to say.
Cross-posted at BizzyBlog.com.
