I couldn’t dig too deep into this morning’s dismal BEA report on the economy because it was one of those impossible-to-enjoy government reports, and I’m already committed to going over the BLS numbers every month. Something, as they say, has gotta give. But I did drill down into CNBC’s writeup, and things may be worse than even the lousy negative “growth” rate suggests.
Here’s part of what I mean. CNBC says that “Data ranging from employment to manufacturing suggests growth will accelerate sharply in the second quarter,” which is all well and good. But what kind of growth are we expecting? Read:
Businesses accumulated $49.0 billion worth of inventories, far less than the $87.4 billion estimated last month.
It was the smallest amount in a year and left inventories subtracting 1.62 percentage points from first-quarter growth. But inventories should be a boost to second-quarter growth.
Simply restocking inventory sold off during a low-production quarter isn’t sustainable growth — it’s simply making up for lost time. Restocking the shelves after a lousy quarter isn’t actually “acceleration.”
And as is typical, consumer spending and government borrowing accounted for things not looking even worse:
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.1 percent rate. It was previously reported to have advanced at a 3.0 percent pace.
Spending was boosted by the Affordable Healthcare Act, which expanded healthcare coverage to many Americans.
Consumer spending — up in part by government mandate — stripped store shelves bare while factories went idle, and doctors got what might prove to be a one-time boost in patient visits… sets the stage for yet another “Recovery Summer?”
Sorry, but I’m not feeling all that recovered quite yet.