Longtime readers know that if the current stagnating economy were occurring during a Republican or conservative presidential administration, the press would be searching high and low to find a "respected" economist or analyst forecasting the beginning of an economic contraction while screaming that a recession is just around the corner. Instead, the business press has stuck to saying that "most economists" are predicting a first-quarter economic growth result of under an annualized 1 percent.
Well, on Friday, a major firm released the first official projection of contraction I've seen — and yes, the press has failed to notice it. But it's understandable, because the circumstances make one wonder if the firm involved and its chief economist aren't trying to keep the result as invisible as possible in hopes that the current figure can soon be revised upward.
The firm, related web site, and chief economist involved are Moody's, Economy.com, and $2,700 Hillary Clinton for President contributor Mark Zandi.
A visit to that site's "U.S. High Frequency GDP Model" at 6 p.m. revealed that its most recent narrative was prepared on Thursday. That the narrative predicts 0.1 percent annualized growth for the first quarter, but it also indicates that "Next up for tracking first quarter GDP is March industrial production, released Friday" — i.e., three days ago:
But watch what happens when one moves his or her cursor to the bottom right of the small graph presented:
Holy moly, it says -0.1 percent. (Skeptics who need to see the positive 0.1 percent tag for April 14 can see it here.)
The industrial production report Moody's Thursday's narrative mentions is the reason why Friday's drop makes sense. The Federal Reserve reported that overall production fell by 0.6 percent in March instead of the predicted -0.1 percent, and that the manufacturing component dropped by 0.3 percent.
I don't recall Moody's ever making a change to its projections without revising the narrative to explain what happened. How odd (no, not really) that the one time it didn't happen is the time the projection dipped below zero, and that it can be detected only when a user who happens to run his or her cursor over the affected portion of the graph. The graph itself doesn't even show the dot for the negative value, so it wouldn't occur to most people to go looking for it.
So here's a memo to the establishment press: Moody's, the firm whose chief economist is a go-to guy for pull quotes, broke the ice and dropped its GDP projection to an annualized -0.1 percent on Friday. That figure is still there for anyone who bothers to look for it. (And maybe the fact that it's so well-hidden is newsworthy.)
Here are three responses to those who will claim that Moody's drop below zero shows that its integrity is intact, even though its chief economist gave the max to the Hillary Clinton for President campaign in 2015:
- Why didn't the firm revise its narrative on Friday, or, failing that, today?
- Why does one have to get lucky and mouse over the negative result to see it?
- The fact remains that Zandi, the firm's chief economist, is not independent and objective in appearance as a result of his political contribution. As a result, the firm by definition has no credible response to skeptics who believe that its High Frequency GDP Model would showing a more negative result if its chief economist hadn't donated to the leading presidential candidate in the incumbent political party.
Cross-posted at BizzyBlog.com.
