There are two key words missing from the report Bloomberg's Kasia Klimasinska & Shobhana Chandra published Tuesday morning — a writeup that is so incredibly sunny and over-the-top that is probably would have embarrassed the Old Soviet Union's Pravda in its heyday.
One is "income." The reason is obvious. Real median household income is still way below where it was when the recession ended four long years ago. The other absent word is "deficit." This enables Bloomberg's pathetic pair to glide though a discussion of the national debt-ceiling situation and make Republicans look like the heavies. The final problem is that they act as if we're in the fifth year of unbroken expansion, when we're not. Excerpts follow the jump.
Here goes (bolds and numbered tags are mine):
America Resilient Five Years After Great Recession
... the economy, with help from the Federal Reserve, [1] has emerged from the ruins “in much better health” ... The U.S. is weathering federal budget cuts and higher payroll taxes, growth is picking up and some economists predict the expansion, now in its fifth year, may last longer than most. [2]
The signs of resilience are everywhere: [3] Households continue to spend. Businesses are investing and hiring. Home sales are rebounding, and the automobile industry is surging. Banks have healthier balance sheets, and credit is easing. All this coincides with the economy shedding the excesses of the past, such as unmanageable levels of consumer and corporate debt.
... “We are in a much better place than we were five years ago,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. [4] “Consumers are feeling much, much better; certainly investors are.”
... “Considering the trauma we went through and the panic in the markets, the economy has really done pretty well,” and is “strong enough to support higher equity prices,” [5] said John Carey, a portfolio manager at Pioneer Investment Management Inc. in Boston, which manages about $200 billion. “Stocks look attractive relative to bonds,” and shares of consumer-related and regional banks will benefit the most from growth in spending and demand for credit.
All right, that's all I can stand. It's as if these people haven't seen a negative piece of economic data in months, when there has been more than enough bad news.
Here are the notes:
[1] — Proper translation of "with help from Federal Reserve": "propped up by the Federal Reserve, without which, as Ben Bernanke himself said about a month ago, the economy 'would tank.'"
[2] — Oh brother. They're getting ready to celebrate the worst economic expansion following a downturn since World War II because its mediocrity is so long-lasting. Except ... it's not. They "somehow forgot" that the revised GDP numbers released a month ago told us that the economy contracted by an annualized 1.3% in the first quarter of 2011. This is NOT an unbroken expansion, unlike the 26 consecutive quarters of expansion seen during the Bush 43 administration (3Q-2001 through 4Q2007), the 39 consecutive quarters (2Q-1991 thorugh 4Q-2000) during the Bush 41-Clinton years, or the 32 straight quarters (4Q-1982 through 3Q1990) during the Reagan-Bush era.
[3] — Signs of "resilience" (sarcasm on for the rest of this note) include a 20% decline in seasonally adjusted new home sales from June to July, before June itself was revised down by about 8%; a 7.3% drop in durable goods orders; and a troubling upward spike in Gallup's daily unemployment tracking poll, giving rise to legitimate worries about where the officially announced rate is heading in the coming months.
[4] — This is the same Mark Zandi who insisted in the ADP Employment Report conference call in late July that there is (from my notes, except for the quoted word) no significant evidence of health care reform impact, (evidence “evaporated” in the summer), or that businesses are moving people from FT to PT. Geez, Mark, even Obama-loving NBC has figured out that your dodge is a load of rubbish.
[5] — Uh, excuse me. Every time Ben Bernanke seems to be leaning towards tapering, the markets start heading south. If there are across-the-board fundamentals to support higher equity valuations, I'd like to know what they are. Mediocre 2%-2.5% GDP growth wouldn't be one of them.
I didn't even get to how Obamacare's implementation blowup, which seems on track towards becoming a reality at the moment, would do to hurt consumer confidence and create economic uncertainty.
These people need to get out of their offices and see what's really going on outside the DC-Manhattan bubble. Failing that, they should at least read the recent report about the precipitous declines in household income published by Sentier Research.
Cross-posted at BizzyBlog.com.
