The Potemkin Economy
The disappointing March employment report the government released on April 3 finally forced the business press to 'fess up to the truth, best summed up in words found at the Associated Press: "For months, the U.S. economy's strength has been flagging."
That admission takes "too little, too late" to a whole new level.
During the past several months, business scribes and broadcasters have largely pretended that all is well, constructing and maintaining a Potemkin-like facade of a prosperous economy, even as the vast majority of hard-number economic indicators turned in performances ranging from middling to awful. To prop up their false image, they concentrated most of the commerce-related news they delivered to low-information voters and low-awareness news consumers on the job market, the economy's one supposedly strong area, and positive consumer and corporate sentiment surveys.
After the strong economic growth seen during the second and third quarters of last year, the AP, aka the Administration's Press, has been especially odious in insisting that the economy is still really "robust," while coming just inches short of declaring that President Barack Obama's economic critics should be cowering in the corner in shame. Until the employment report, the shouting only got louder as the underlying data deteriorated further.
On February 20, the wire service's Jim Kuhnhenn admired how Obama was "taunting Republicans" over the economy. Devoid of any sense of historical irony, Kuhnhenn described an "economic recovery showing signs of taking hold" — over 5-1/2 years after the recession officially ended.
When Kuhnhenn wrote his love letter, we had already seen:
- Seasonally adjusted annualized fourth-quarter growth of 2.6 percent, barely half that reported in the previous quarter. That figure was revised down to a mediocre 2.2 percent just a week later. Given the next several items which follow, that revised figure still seems high.
- Steep November and December declines in durable goods orders totaling over 5 percent.
- Sharp consecutive drops in December and January retail sales.
- A microscopic two-month advance of less than 0.2 percent in November and December construction spending.
- December slippages in both real and current-dollar personal consumption expenditures.
Not to be outdone, five weeks later, the AP's Martin Crutsinger composed a veritable hosanna of dishonest praise directed at Dear Leader's economy, which he described as "sluggish," but "one of the most durable since World War II."
Crutsinger removed all doubt over whether he was bearing false witness when he wrote the following:
The current expansion will mark its sixth anniversary in June, meaning it will have already lasted 14 months longer than the average expansion since the end of World War II.
In referring to "months," Crutsinger pretended that the economy has continuously expanded since the recession's end. It hasn't:
The previous expansions to which the AP writer referred were legitimate, because they were uninterrupted. By contrast, as seen above, the economy has contracted twice since the recession's end. Its current winning streak is only three quarters. Therefore, despite what Crutsinger wrote, there will be no six-year anniversary to "mark" in June — and he has once again demonstrated why National Review's Kevin Williamson was correct in calling him the nation's "Worst Economics Writer" two years ago.
Until March's employment report, the economy had indeed added an impressive-sounding seasonally adjusted 200,000 or more payroll jobs per month for 12 months. Though it's a nice round number and the best such streak in 15 years, it's still not particularly strong in historical context. More importantly, it remains far from what's required to get discouraged and disengaged Americans on the sidelines who want to work back to work, or searching for more financially rewarding work.