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Sign ‘O’ the Times

June 25th, 2014 - 9:43 am

The first report was that the U.S. economy was essentially and unexpectedly flat in Q1, but then was unexpectedly revised downward to a 1.0% contraction. The final figure is now in, and it looks (quite unexpectedly) like the economy shrank at the annualized rapid rate of 2.9% last quarter. What’s to blame? The weather — and then some:

While the economy’s woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather. Growth has now been revised down by a total of 3.0 percentage points since the government’s first estimate was published in April, which had the economy expanding at a 0.1 percent rate.

The latest revisions reflect a weaker pace of healthcare spending than previously assumed, which caused a downgrading of the consumer spending estimate. Trade was also a bigger drag on the economy than previously thought. The economy grew at a 2.6 percent pace in the final three months of 2013. With the first quarter in the rear view and the April-June period looking stronger, investors are likely to ignore the report.

The drop in exports might also have something to do with a weaker global economy, which points to the folly of relying on exports for growth — a strategy relied upon by every administration since Bill Clinton’s. A country which can’t grow on the strength of its domestic economy, which must instead depend on debt, easy money, and the kindness of foreigners, is a disaster waiting to happen.

That point about healthcare spending stands in sharp contrast to the administration’s previous insistence that increased spending under ♡bamaCare!!! had saved us from a contraction in Q1. That claim reveals the lie that ♡bamaCare!!! was supposed to save us money. Instead, the White House was depending on increased costs to you and me, right from the get-go. That makes me wonder if perhaps they were counting on us spending more on healthcare to more than make up for ♡bamaCare!!!’s costs to the rest of the economy — like cutting the end off a piece of string, knotting it to the other end, and expecting the string to become longer. In reality of course, the knot (in this case representing ♡bamaCare!!!) makes the string effectively shorter. I expect that folks with ♡bamaCare!!!-compliant coverage might be spending less in the short term, due to their higher copays and deductibles. That will work right up until they actually get sick, which is not something anyone wanting to remain solvent ought to do under the ACA.

Also note that in this age of global warming, we experienced a winter so cold and snowy that it prevented us from spending more on the law that was going to save us money. On a side note, never confront a Democrat with all these facts at once, or their head might explode. My head is merely pre-hurting from the hangover I plan on having tomorrow morning.

But there is a silver lining to be found, if you’re willing to squint really hard to see it:

Data such as employment, manufacturing and services sectors point to a sharp acceleration in growth early in the second quarter. However, the pace of expansion could fall short of expectations, which range as high as a 3.6 percent rate. Economists estimate severe weather could have slashed as much as 1.5 percentage points from GDP growth in the first quarter. The government, however, gave no details on the impact of the weather.

Oh, really?

Real employment has barely budged this year, durable goods orders contracted in May, consumer spending contracted in April and was flat in May. If we’re going to get robust — that’s better than 3.0% — growth this quarter, it’s pretty much all going to have to happen in June. And I almost hesitate to mention that June is nearly over. Have the previous 25 days felt robust-y to you?

Comments are closed.

Top Rated Comments   
So, if I understand you correctly, it looks like George W. Bush is about to cause another recession.
31 weeks ago
31 weeks ago Link To Comment

Don't be silly--depressions only start when there's a Republican in the White House.
31 weeks ago
31 weeks ago Link To Comment
Uh yeah - if we have another "negative growth"* doesn't that mean we're in a depression?

*Love that term, I'll have to start using something like "negative sobriety" to feel better.
31 weeks ago
31 weeks ago Link To Comment
All Comments   (18)
All Comments   (18)
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How many years have we been in a "recovery" now? I thought that was mere propaganda the first time I heard a newscaster use it and have yet to find evidence to reevaluate my initial opinion of the term. Recovery is the new Depression.
31 weeks ago
31 weeks ago Link To Comment
Anyone notice that not a single Obamatroll talks about the stock market any longer?

That supposedly was one of the signs of "Obamasuccess." Maybe they don't talk about it much any more because it has lost more than 23% in just the last three months? (Somehow, I don't think that's because the Wall Street traders couldn't get to work...)

Went below 11,000 last week - look for it to get back to just four digits sometime in July or August.
31 weeks ago
31 weeks ago Link To Comment
Where's Winston Smith when we need him?
31 weeks ago
31 weeks ago Link To Comment
This darn global warming. If we sacrifice the free market to the rain gods all will be healed.
31 weeks ago
31 weeks ago Link To Comment
Imagine how much worse the brutal winter would have been without global warming.
31 weeks ago
31 weeks ago Link To Comment
If the second quarter is stagnant, they'll hail it as an indication of a robust response to a bitter winter, or Summer of Recovery III, or Big Brother has again increased the chocolate ration.
31 weeks ago
31 weeks ago Link To Comment
So, if I understand you correctly, it looks like George W. Bush is about to cause another recession.
31 weeks ago
31 weeks ago Link To Comment
I think you mean a large country. For small countries like the one I live in (Israel) exports (and throwing out much of the old socialist system) have moved us from a third-world country to a first-world one.
31 weeks ago
31 weeks ago Link To Comment
Its only "V" Shaped if it is in fact, recovering. The fact that the trend is flat to negative shows that the downward slope is still in play.

At this point its important to stop looking for guidance and help from the current administration and start looking at how much longer we have to endure this situation. The results will not change until there is a change in management.
31 weeks ago
31 weeks ago Link To Comment
Uh yeah - if we have another "negative growth"* doesn't that mean we're in a depression?

*Love that term, I'll have to start using something like "negative sobriety" to feel better.
31 weeks ago
31 weeks ago Link To Comment

Don't be silly--depressions only start when there's a Republican in the White House.
31 weeks ago
31 weeks ago Link To Comment
Almost right, there. Recessions, historically, have usually started under Republican administrations. Most of them have also ended under Republican administrations.

Depressions happen when a Democrat gets into the White House (along with a compliant Congress) and starts "fixing" things.

FDR managed it with the Hoover caused recession. Clinton tried his best with the Bush I recession, but only had two years to work with before he got a decidedly non-compliant Congress. (Thankfully, he was too busy using his desk for other purposes to notice that there was a pen and a phone on it too...)

The latest certainly started under Bush II, no doubt about it. But it took a Barack (and a Harry, and a Nancy) to turn it into a depression.
31 weeks ago
31 weeks ago Link To Comment
One of the hardest things to do in pretty much anything of complexities is to dimension the problem, map it so to speak to find the elements that make up the inner workings of the system. The goal is to find the root causes that created outcomes.

Now in the case of the current economic malaise every element is rooted in bad (leftist) government policy. Get rid of the policy, the outcomes are better.

In the bizzaro world of the progressive malignancy the problem lies in the fact that trying to find the root causes is considered an attack. Which in finding the truth becomes becomes a wild conspiracy accusation.

31 weeks ago
31 weeks ago Link To Comment
Yes, and when it becomes a depression, we'll discover that it started when Bush was in the White House.
31 weeks ago
31 weeks ago Link To Comment
two consecutive quarters of negative growth is a recession (by one common definition) the difference between the two is more nebulous:

Gregory Mankiw (in his economics text) distinguishes between the two:

There are repeated periods during which real GDP falls, the most dramatic instance being the early 1930s. Such periods are called recessions if they are mild and depressions if they are more severe.
31 weeks ago
31 weeks ago Link To Comment
the Q2 numbers will be massaged to show growth if at all possible. the later revisions will then allow the MSM to say that the recession was so mild that we were out of it before we even knew we were in it.

that assumes that Q3 can be made to show growth, of course.

31 weeks ago
31 weeks ago Link To Comment
Not only will Q2 be "massaged", I suspect even the revision of Q1 deliberately kept it below 3.0 percent.
31 weeks ago
31 weeks ago Link To Comment
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