This shouldn't be a trick question, but to the nation's establishment press business reporters it apparently is: What is the current length of the U.S. economy's expansion?
The answer, after yesterday's reported 0.7 percent annualized contraction in U.S. Gross Domestic Product, is obviously zero. But that's not what Bloomberg News and reporter Sho Chandra, who has used her full first name of Shobhana in previous reports, would say. Despite three separate quarterly contractions since the recession officially ended in the second quarter of 2009, they, like the Associated Press's Martin Crutsinger two months ago, want us to believe a fairy tale, namely that we're still closing in on six straight years of expansion.
Chandra's report also hauled out the "weather" excuse the business press never gets tired of using — twice (bolds are mine):
Economy in U.S. Shrinks for Third Time Since Expansion Began
For the third time since the expansion began in June 2009, the U.S. economy suffered a setback.
Gross domestic product shrank at a 0.7 percent annualized rate in the first quarter, revised from a previously reported 0.2 percent gain, according to Commerce Department figures issued Friday in Washington. That’s the weakest reading since frigid winter temperatures derailed growth at the start of 2014.
While bad weather once again probably contributed to last quarter’s slump, other impediments were also at work -- including a swelling trade deficit caused by a strong dollar and plunging investment in oil exploration following the drop in fuel prices. Federal Reserve officials are among those who believe the slowdown will be temporary, helping explain why they are considering raising interest rates later this year.
“The economy slowed in the first quarter but we’ll see an acceleration in the second quarter,” said Michael Gapen, New York-based chief U.S. economist for Barclays Plc. “It keeps the Fed in line for a rate hike in September.”
Other reports Friday showed consumer sentiment fell less than previously estimated this month, while manufacturing in the Chicago region unexpectedly slumped.
Here is the projected status of the "acceleration" to which Mr. Gapen refers:
- As of May 26, the Atlanta Branch of the Federal Reserve, whose GDPNow model almost exactly nailed the government's original positive 0.2 percent first-quarter growth estimate, was predicting that the second quarter will come in at an annualized 0.8 percent.
- As of Friday, even the incurable Keynesian optimists at Moody's High Frequency GDP Model were predicting an annualized 1.5 percent.
They're not predicting an "acceleration." Considering population growth, they're talking about what barely qualifies as a snail's pace.
As to the economy's so-called "expansion," as of the end of March, it officially doesn't exist. As I noted in late March when the AP's Crutsinger pushed the same nonsense that Chandra and Bloomberg are now promoting, there's a half-century of precedent for my drop-dead obvious contention:
... consecutive quarters of economic growth, the measurement of post-downturn economic consistency (have been) commonly used to determine the durability of recoveries since at the least the 1960s.
The fact is that the economy under President Obama, in the 23 quarters since the recession officially ended, has now turned in three negative quarters (1Q2011, -1.5 percent annualized; 1Q2014, -2.1 percent annualized; 1Q2015, -0.7 percent annualized). Its longest streak of consecutive quarters of growth has been 11 — and one of the quarters in that streak, at a whopping +0.1 percent annualized (4Q2012), could go negative when comprehensive GDP revisions are released in June.
Just as any loss ends a winning streak in sports or the stock market, any contraction which interrupts an expansion ends it. The best thing the Obama administration and the reporters covering the economy can say is that the country has avoided another recession for almost six years. That's it.
Cross-posted at BizzyBlog.com.
