GDP numbers released... must be one of those sneaky "reverse recessions"

[Zen-like Todd]

http://www.nytimes.com/2008/08/01/business/01econ.html

WASHINGTON — The government said Thursday that economic growth picked up in the second quarter as tax rebates energized consumers somewhat. The rebound followed a treacherous patch where the economy actually jolted into reverse at the end of 2007.

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The Commerce Department reported Thursday that gross domestic product, or G.D.P, increased at an annual rate of 1.9 percent in the April-to-June period.

That marked an improvement over the feeble 0.9 percent growth logged in the first quarter and an outright contraction in the economy during the final quarter of last year.

Still, the second-quarter rebound was not as robust as economists had hoped; they were forecasting growth to clock in at a 2.3 percent pace. The rebound, while welcome, is not likely to be seen as a signal that the fragile economy is out of the woods. There are fears that as the bracing tonic of the tax rebates fades, the economy could be in for another rough patch later this year.

The health of the economy is the top concern of the public — and by extension politicians including candidates vying for the White House. And Dow futures, which had been trading higher, quickly began trading down after the new report came out.

G.D.P. actually contracted by 0.2 percent, on an annualized basis, in the last three months of 2007, according to annual revisions released by the government.

That contraction reflected the deepest cutbacks in 26 years from builders clobbered by the housing slump and caution on the part of consumers spooked by all the fallout.

The fourth-quarter’s dip marked the worst showing since the third quarter of 2001, when the economy was last in a recession.

The government’s old estimate for the final quarter of last year was in positive territory — but not by much — at an anemic 0.6 percent growth rate.

[SkinsHokieFan]

Quite surprising, in particular for the 2nd quarter of this year

[Burgold]

I'm going to be overcynical for a moment. We've read time after time about how the government has redefined terms in order to present more favorable results. I remember them doing that multiple times with employment numbers, changing the definitions of what "unemployed" means and thus changing how numbers must be calculated to get the best looking result. I hope we are improving, but they lie about everything and have no compunction against doing so.

[zoony]

I'm going to be overcynical for a moment. We've read time after time about how the government has redefined terms in order to present more favorable results. I remember them doing that multiple times with employment numbers, changing the definitions of what "unemployed" means and thus changing how numbers must be calculated to get the best looking result. I hope we are improving, but they lie about everything and have no compunction against doing so.

The burden of proof is on you.

As for the GDP numbers, not too surprising really... given how diversified our economy is + how much $$$ the Fed has printed over the past 6 months.

[JohnLockesGhost]

Given the intervention of the government, I'm not surprised if the numbers look like this. For a short-term "benefit" the government has further mortgaged our future.

[JohnLockesGhost]

I'm going to be overcynical for a moment. We've read time after time about how the government has redefined terms in order to present more favorable results. I remember them doing that multiple times with employment numbers, changing the definitions of what "unemployed" means and thus changing how numbers must be calculated to get the best looking result. I hope we are improving, but they lie about everything and have no compunction against doing so.

You're right when it comes to the CPI and inflation. Government changed the formula because Social Security and other entitlement payments are indexed to inflation, so the lower inflation the more money the government saves.

http://www.alternet.org/workplace/92910/in_a_perfect_storm_of_economic_stagflation%2C_the_yachting_set_says%3A_%22let_them_eat_pizza%22/

But looking beyond the official numbers -- the data on growth and inflation that most economic reporters bandy about --reveals a deeper truth about the American economy. The reality is that those who aren't at the very top or the very bottom of America's economic food chain have been mired in a long period of painful stagflation. Bit it's a reality that's obscured by the ways in which we measure our nation's economic health.

So while anyone who draws a paycheck knows that prices are rising fast and salaries haven't kept up for a long time, the S-word is never mentioned in our economic discourse. There are two reasons for that. First, a number of government benefits like Social Security payments are indexed to inflation, and since the dawn of the Reagan era, a series of changes were made to the way the government measures it, largely as a back-door way of keeping the growth of entitlements in check without pissing off veterans' groups or the AARP.

Inflation Nation

Newsweek tells us that "the situation we're in is nowhere near stagflation." After all, "the Consumer Price Index is rising at a 3 percent annual rate, compared with 13 percent in 1979."

What Newsweek doesn't mention is that the measures of inflation commonly discussed today bear little resemblance to the stats used in the 1970s.

In large part, that's because the Consumer Price Index (CPI) -- the most frequently cited measure of inflation in media reports -- is used to determine government benefits like Social Security, federal and state pensions and Medicare payments. Until the late 1970s, the index was based on a relatively simple formula. Officials took a theoretical "basket of goods" that "typical" consumers required and averaged their current prices. But, as economist John Williams, author of the Shadow Government Statistics newsletter, explains, "miscreant politicians, who were and are intent upon stealing income from social security recipients," made dramatic changes to the way CPI is calculated in the 1980s and 1990s, resulting in a drop in the official inflation rate made with a stroke of the pen and with little fuss from the public.

To gauge what most of us are really experiencing on a day-to-day basis, one might imagine economic reporters relying on a monthly "pizza index" instead of the Consumer Price Index. According to a February report by Al Olson of MSNBC, "Pizza makers have seen their cheese costs soar this year from $1.30 a pound to $1.76 a pound. Even worse, the flour used to make the dough has gone from $3 to $7 a bushel to $25 a bushel in less than a year." Between the second quarters of 2007 and 2008, even the paperboard used to make pizza boxes increased by 8 percent. (Several years of inflation in tomato prices -- for the sauce -- have been blunted by the recent salmonella scare.)

The same is true for a host of items that working America buys every day. Olson wrote, "If you're looking for a sure sign the U.S. economy is headed in the wrong direction, all you need to do is look at the skyrocketing price of 'recession-proof' foods: pizza, hot dogs, bagels and beer." But those items, and other costs that impact ordinary people significantly, are under-counted in the consumer price index.

Beginning in the early 1990s, conservative economists were unhappy that high inflation kept increasing entitlement payments to government employees, vets and the elderly -- whiners and greedy gray-hairs -- and, through some impressive intellectual contortionism, began making adjustments to the way the "official" rate of inflation is measured. They began "weighting" items in the basket differently.

[zoony]

http://www.alternet.org/workplace/92910/in_a_perfect_storm_of_economic_stagflation%2C_the_yachting_set_says%3A_%22let_them_eat_pizza%22/

What an absolutely hilarious website.

If anyone is in the mood for some comedic gold, check it out :laugh:

[Monte51Coleman]

Looks like most spent their rebate checks afterall.

[PleaseBlitz]

What an absolutely hilarious website.

If anyone is in the mood for some comedic gold, check it out :laugh:

I just did. Here are the headlines that convinced me that the site may not be unbiased:

In a Perfect Storm of Economic Stagflation, the Yachting Set Says: "Let Them Eat Pizza"

Ohhhhhhh, the yachting set. The rich are evil!

Desperate McCain Tries to Play Terror Card One More Time

McCain is evil!

Did Right-Wing Shock Jocks Motivate Knoxville Killer?

Right wing shock jocks are surely evil and promote murder!

Forget the Surge -- Violence Is Down in Iraq Because Ethnic Cleansing Was Brutally Effective

The surge is EVIL! And didnt work.

Right-Wing Pathologies Revealed After Adkisson Shooting at Unitarian Church

Again, being right wing makes you a murder!

The Danger of Meat-Heavy Diets

Meat is evil! Be AFRAID!

Are We Facing Just Another Market Problem or a System Collapse?

Either way WE'RE DOOOOOOMED!

God, it keeps going. :laugh:

Iraq is About to Explode

McCain Doesn't Have a Prayer

Massive Economic Disaster Seems Possible -- Will Survivalists Get the Last Laugh?

[JohnLockesGhost]

Looks like most spent their rebate checks afterall.

Spending helps the numbers, but will hurt the economy in the long-term.

[Monte51Coleman]

Spending helps the numbers, but will hurt the economy in the long-term.

Define long term.

[JohnLockesGhost]

Define long term.

Next five to ten years and beyond.

[Monte51Coleman]

Next ten years and beyond.

Imho, the total of the rebate checks amortized over that period will be less than a drop in a bucket.

[JohnLockesGhost]

Imho, the total of the rebate checks amortized over that period will be less than a drop in a bucket.

Even if you include interest payments and opportunity costs, you're probably right, but the effects are likewise a drop in the bucket over that timeframe.

[Westbrook36]

The burden of proof is on you.

As for the GDP numbers, not too surprising really... given how diversified our economy is + how much $$$ the Fed has printed over the past 6 months.

Not really considering the government has been in the process of blatantly lieing about these numbers then revising them later. Q4 was orginally released at .6 percent increase in GDP and now it is revised at -0.2 percent. It would have been huge headlines at the time but now you hardly hear a blip about it. OOPS, our bad. Yeah right.

[Monte51Coleman]

Even if you include interest payments and opportunity costs, you're probably right, but the effects are likewise a drop in the bucket over that timeframe.

The checks weren't intended to effect the economy over a 10+ year time period.

[JohnLockesGhost]

The checks weren't intended to effect the economy over a 10+ year time period.

And therein lies the problem, my friend.

We don't have a political class trying to establish sound policy for long-term growth, we have a political class looking to delay any temporary hardships until after the next election.

[Monte51Coleman]

And therein lies the problem, my friend.

We don't have a political class trying to establish sound policy for long-term growth, we have a political class looking to delay any temporary hardships until after the next election.

You're preaching to the choir.

[Fergasun]

Nice unemployment numbers out today buddy! 5.7% ... and even that number is a little cooked...