The Commerce Department reported Thursday that the economy grew at a 3.8 percent annual rate in the April-to-June quarter, the strongest showing in just over a year. Although the new reading for the second quarter was slightly less robust than a previous estimate of a 4 percent growth rate, it nonetheless marked a substantial improvement over the feeble 0.6 percent growth rate registered in the prior quarter.
The increase in the rate of growth, though, is likely to be fleeting. A deepening housing slump and a painful credit crunch since the spring has darkened the mood of individuals and businesses alike. That has led analysts to predict that economic growth has slowed considerably in the quarter that ends Sunday.
The National Association for Business Economics says it believes growth in the third quarter -- the period from July through September -- slowed to a pace of around 2.4 percent.
GDP growth was good, but the painful credit crunch is going to restrict growth in the next quarter to 2.4%. Fine.
Here's a similar prediction:
Most economists expect the economy to slow in the third quarter, which ends Sunday. The median forecast by economists surveyed by MarketWatch for third-quarter GDP is 2.3%, followed by a further slowdown to 1.5% growth in the fourth quarter.
That's it, George Bush's economy sucks, and we know that because next quarter's growth is going to bad.
Wait! Sorry! That was the news from the second quarter (with a prediction about the third quarter). My apologies. Let's fast-forward to the third quarter to see if the news was even worse than predicted:
U.S. economic growth fastest in four years
GDP for third quarter steamed ahead at revised 4.9 percent rate
WASHINGTON - The economy barreled ahead in the summer, growing at a 4.9 percent pace. The performance was the strongest in four years, but isn’t expected to last through the current quarter amid the continuing housing slump and credit crunch.
My point? The sky is always falling when a liberal reporter looks ahead in an effort to gauge the future performance of George Bush's economy. In the second quarter, U.S. GDP grew by an impressive 3.8%, but the prediction was that it would drop to 2.3% in the third quarter. As it turns out, the true figure was more than double the predicted value. To appreciate the strength of the economy, you have to look in the backward direction, not the forward direction. In the forward direction, the sky is always falling, as it has been throughout every single quarter of the Bush administration. Looking forward, there is nothing to constrain one's thinking. As such, psychological pessimism dictates the story (and liberal reporters are a pessimistic lot, especially with a stupid and evil Republican in the White House). By contrast, looking back, actual data will serve to constrain one's thinking. No matter how pessimistic you are, you simply cannot deny the fact that GDP growth was really quite impressive despite rampant pessimism (yet again).
I love how the story ends:
The public is giving Bush low marks for his handling of the economy. Just 32 percent — a record low— approve of his economic stewardship, according to a recent AP-Ipsos poll.
Record economic growth coupled with record dissatisfaction (well, not quite record economic growth, but I hope you'll grant me some poetic license here to underscore my point). It seems paradoxical, but all you have to do is read through this entire story, and you'll understand the phenomenon. The sky-is-always-falling phenomenon does not just apply to GDP growth. Here is a story from way back in 2003 that should sound pretty familiar:
Welcome to the Amazing Jobless Recovery
It will take 340,000 new jobs a month to get back to near-full employment by late 2004. Sadly, there's little chance of that happening
The unemployment rate is now 6.4%, a nine-year high. Optimists note that the rate of job decline has slowed and that the unemployment rate is up mainly because formerly discouraged workers are returning to the labor force. The Administration's tax cuts will provide about $200 billion of stimulus in the second half of 2003. All of this supposedly prefigures a real improvement on the labor front in the coming months.
But a closer look at the employment data suggests a bleaker picture...
It's always bleak when a reporter is knowingly prognosticating on the future of George Bush's economy. No wonder everyone is so down on him. The future has been bleak since 2003! That's a long time to suffer through a bleak future (which, now that it is past, was characterized by impressive GDP growth and low unemployment).
Of course, everyone just forgot about the jobless recovery when the actual unemployment rate fell below 5% (it's 4.7% now). Every time the actual numbers destroy the pessimistic theory, reporters just move on to the next predicted disaster and forget all about their demonstrable failure to accurately predict what is coming next.
We all know, for example, that stagnant wages are here to stay (all thanks to George Bush's lack of interest in the little guy). In fact, the BBC said as much a little over a year ago:
The end of the American dream?
Average hourly real wages for both college and high school graduates actually fell between 2000 and 2005, and fewer of the jobs they found carried benefits such as health care or company pensions.
The poor performance of the US economy in delivering fuller wage packets may be one reason why the public gives the Bush administration's such a low rating on economic policy.
This is a standard liberal trick. Focus on one part of the income story (wages only, as if people have no other sources of income even though many do). OK, fine. Let's play their silly game and look at wages in George Bush's terrible economy. I just came across this news from the left-leaning Economic Policy Institute:
The hourly wages of most workers—blue-collar workers in manufacturing and non-managers in services—have been growing at around 4% per year in recent months, and this has been fast enough wage growth to consistently beat inflation and boost these workers' buying power.
Here's a chart:
What this means is that for every month of 2007, hourly wages for the little guy have been increasing faster than inflation. These liberal economists are excited about the fact that wage increases barely outpaced inflation last month, as if that fact portends disaster, but the future is hard to predict with any degree of certainty. That's why I prefer to look back at where we have been. Just look at that chart (not at a liberal reporter's prediction) to see what the wage story really is.
If any reporter happens to stumble across my post, I have a simple request: can you please just wait until economic performance is actually bad before declaring that all is lost? No? I didn't think so...
21 comments:
But it either means that economic forecasting is extremely difficult (or impossible) or that these reporters haven't mastered the technique, yet. It would be nice if they would also comment on which of those (or any other) reason for their forecasting failures.
And perhaps comment on their past predictive performance in the biline of each of their economic forecasts.
Nostradamus they are not.
-K
Don't worry, the Mouse will be back declaring that high gas prices and health insurance inflation has caused the malaise he/she knows is there. Mouse read it in the NYT.
i wonder if engram would care to go back and check economic predictions in the 90s to see whether or not the economists were issuing dire warnings in order to make people dissatisfied with clinton. the problem here is that engram casts a political interpretation on all economic forecasts. i haven't heard anything from 'leftists' about a 'jobless recovery' since 2004 myself, but engram is still smarting.
according to practitioners of the dismal science, if the fed is able to lower interest rates, which of course they can do by fiat if it is feasible, then the predicted slowdown this summer might be soft. and, as is often said on wall street, the dow has predicted 8 of the last 4 recessions (that's a joke, son).
the degredation in buying power for the american consumer is something that has been happening since the 50s, when one wage earner was enough to sustain most households, and houses, gas, and healthcare as compared to income cost less than one fifth of what they do today. also, what people feel about the future is of course the greatest contributor to what they 'feel' about the economy. quite simply, at the end of the clinton administration, gas prices weren't skyrocketing, and even though the dow had cratered, they felt more secure in their jobs, and the very unsettling crazyness in the housing market hadn't really taken off. but engram wants to think that there's a giant conspiracy of economists to make bush look bad. it must be all those socialists working on wall street, eh?
it's all well and good to look at charts, but the average price of a house in CA in 2000 was 300k, and now it's 600k. have incomes doubled in that time? petroleum was $20 a barrel in 2000, now it's $97. petroleum, which is needed to move just about everybody and anything in this economy, in addition to being what most plastics are made out of, is the most inflationary item of all. do you blame consumers for feeling a bit pessimistic when they can barely afford a decent house, and when they see gas prices going up, up, up? yet you think they are being propogandized by an evil cabal of economists out to make bush look bad
the fact is that, despite what reagan liked to claim, presidents don't have that much effect on the overall economy, which in america continues to be fundamentally very strong no matter what, for a number of reasons, which i listed in an earlier post. so, i don't blame bush at all for any of it, and if you look at my posts, you'll see that i never did.
so, to summarize - 1) i am not engaged in an evil plot to make bush look bad, since i do not hold presidents responsible for the state of the economy, good or bad, and 2), despite your graphs and charts, you can't deny that house and petroleum prices have gone up much faster than the rise in incomes, that there is quite a bit of turmoil in both areas, and therefore that americans have a right to be worried about the future of the economy and their own buying power. or do you have a chart to show that the doubling of house prices, and the quadrupling of petroleum prices didn't really happen.
but engram's task is to make out that the economic worries of americans can only be the result of an evil plot
-Anon, a Mouse
healthcare as compared to income cost less than one fifth of what they do today
oops - leave gasoline out of that statement. my bad
-Anon
Although it is sometimes believed that Greenspan's comment was made near the height of the dot-com boom (and contributed to its downfall), it was actually said much earlier, in December 1996 (emphasis added in excerpt):
“ […] Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? […] ”
"The Challenge of Central Banking in a Democratic Society", 1996-12-05
The presence of the short comment—not repeated by Greenspan since—within a rather dry and complex speech would not normally have been so memorable; however, it was followed by immediate slumps in stock markets worldwide, provoking a strong reaction in financial circles and making its way into common parlance. Greenspan's comment was well remembered, although few heeded the "warning."
The losses were quickly recouped and eclipsed by the accelerating stock market boom; as of mid-2007, stock prices have never again fallen to the levels seen following the warning.
imagine that! but somehow i failed to believe that greenspan was part of an evil plot to make clinton look bad. how could i have failed to be that paranoid?
Engram Makes Amazing Discovery That Economists Often Make Incorrect Predictions, Wins Nobel Prize
mutters, "they're trying to make bush look bad..."
-Anon, a Mouse
Anon-
Let's put the posturing aside for a moment, shall we? Which of the following do you agree with?
(a) In general, news as reported through MSM errs to the left, which influences public perceptions of the real state of the world.
(b) In general, news as reported through the MSM errs to the right, which influences public perceptions of the real state of the world.
For all your evidence showing that Engram's data-driven conclusions are wrong, I think you're missing the point. The point is that the correct answer is (a), and Engram gives us a daily example. A thoughtful fella like you that can think objectively if they need to must agree that (a) is the correct, inarguable answer. Every one of Engram's posts, to me at least, is meant to demonstrate this, not to suggest his data-driven conclusions are infallible.
-cmd
p.s. Yes, Don, I typed this at work.
Let's put the posturing aside for a moment, shall we? Which of the following do you agree with?
neither. both fox news and msnbc exists, do they not? i am perfectly capable of seeing commentators of all political stripes giving their various opinions on all cable networks. only right wingers whine continuously that "the media" are out to get them
For all your evidence showing that Engram's data-driven conclusions are wrong, I think you're missing the point. The point is that the correct answer is (a)
oh sure. that's what i hear when i listen to fox news, rush limbaugh, pat buchanan, that right wing idiot glenn beck who has two solid hours on headline news network every night, the former republican congressman joe scarborough who has a two hour program on msnbc every morning (Morning Joe).
Frankly, at this point more than half of the babble on TV and radio is from raving right wingers such as the ones i mention above. this "the MSM is all libberuls and is out to get us" is past paranoid and into delusional at this rate
data-driven conclusions
from the dept. of unintentional humor...
-Anon, a 'data-driven' Mouse
The White House on Thursday lowered its forecast for economic growth for next year and said unemployment would rise as the housing slump and tight credit weigh on national economic activity
http://www.breitbart.com/article.php?id=D8T7E9701&show_article=1
uh oh! them durn libberuls has gotten into our white house!! git the gun, ma!
-Anon, a Mouse who would really like the economy to be stronger next year since he's trying to launch his own company
Anon- Is it at least possible that you feel surrounded by righties partly because you're a progressive?
And also, how do you reconcile your position about a right wing media bias with the ADA study in Engram's Nov 5th post? I don't ask that to be a smart ass- I'm honestly interested in your view.
-cmd
"While the difficulties in housing and credit markets and the effects of high energy prices will extract a penalty from growth, the U.S. economy has many strengths, and I expect the expansion to continue," said Treasury Secretary Henry Paulson.
oh, i guess this so-called 'treasury secretary' has been listening to those ridiculous leftist pessimistic statements that those biased liberals like mouse and krugman have been making. well, he just wants to make the president look bad. after all, engram has already proven, with charts and data-driven conclusions, that everything is for the best in this best of all possible worlds
(strolls away whistling "don't worry - be happy")
-Anon, a Mouse
And also, how do you reconcile your position about a right wing media bias with the ADA study in Engram's Nov 5th post? I don't ask that to be a smart ass- I'm honestly interested in your view.
the studies quoted on the post show the same "tone of coverage" for hillary and rudy. the 'data' generally are highly impressionistic.
i base my opinion on this: limbaugh dominates radio. millions of people listen to him every day as they drive. left wing talk radio has only just gotten started. very few people watch old fashioned network news today - most watch cable news. among those, fox, clearly conservative, has the largest single share. among the three others, headline news and msnbc, while more liberal than not, both have prominent and large blocks of time now dedicated to very conservative commentators, as detailed above. CNN is the only cable news that doesn't have dedicated prime time shows hosted by conservatives.
therefore, newspapers, excluding the editorial page of the WSJ, are the places that have the largest chance of slipping in left wing bias in a hypothetically impartial news report, although the figures cited in the post show that the largest block of reporters consider themselves moderate, with a rather smaller block considering themselves liberal, and an even smaller one calling themselves conservative.
So, what do you think? do more people get their news/opinions from radio and cable tv, or from newspapers and network newscasts? any data on that?
since i read a range of papers and otherwise watch cable news and listen to talk radio, liberal and conservative, i hear tons of conservative opinion every day. somehow it never has the effect of propagandizing me. also, i often hear left wing commentators, especially on left wing talk radio, ranting and raving in a way i find excessive. my point here is that, no matter what measurements you make about the bias of news people, i myself have never felt influenced by all the conservative news/opinion sources, and sometimes find myself disagreeing with left wing commentators, and going to the fox web page or other conservative news sources to see if there isn't some other point of view on some 'objective' news report that might have left wing bias.
to summarize:
- there are more conservative opinions/news sources in the media i consume
- just because i hear conservative opinions, or get stories that tend to emphasize conservative or liberal points of view while claiming to be objective, i don't find that my personal point of view is much affected. so, for me at least, the assumption that people believe everything they hear is not valid.
i have been carefully monitoring fox cable news stories for years to see if i can detect bias in the news reporting, but generally the 'straight' news stories on fox differ very little from the news stories on msnbc or cnn - which initially surprised me.
-Anon, a Mouse
shorter what-i-said:
if your studies priove anything, how come half of what i see on tv news is conservatives? and how come watching fox news isn't turning me into a republcan?
-Anon
The White House on Thursday lowered its forecast for economic growth for next year and said unemployment would rise as the housing slump and tight credit weigh on national economic activity
"While the difficulties in housing and credit markets and the effects of high energy prices will extract a penalty from growth, the U.S. economy has many strengths, and I expect the expansion to continue," said Treasury Secretary Henry Paulson.
http://www.breitbart.com/article.php?id=D8T7E9701&show_article=1
what part of 'the white house and the treasury secretary just said what i said the other day and you called liberal propoganda' don't you understand?
-Anon, a Mouse
Engram,
thanks for the excellent and throught-provoking articles every day. You're always my first stop. Regarding the possibility of liberal bias in media economic projections, I was wondering if anybody (or you... hint, hint) might take a shot at analyzing the relative level of excess pessimism (maybe measured as the ratio of the % of negative economic articles divided by some aggregated measure of actual economic weakness), then looking at that "excess pessimism" metric over time to see if it increases during republican administrations? I'm sure I did not formulate it correctly here, but you probably get the drift of my idea here. Might be interesting, and could help us to see if economic reporting is more negative during repuclican admins, or if economic reporting is ALWAYS negative because that attracts more attention and sells more papers...
Thanks, and keep up the great work,
A regular reader.
My dear friend Mr Mouse-
What is it about Back Talk that you find redeeming? Have any of Engram's posts ever provided you a perspective you hadnt considered, or a data point that nudged your opinion in one direction or another? (Other than reinforcing your belief that conservatives are delusional, of course)
-cmd
What is it about Back Talk that you find redeeming? Have any of Engram's posts ever provided you a perspective you hadnt considered, or a data point that nudged your opinion in one direction or another? (Other than reinforcing your belief that conservatives are delusional, of course)
-cmd
this blog was recommended to me by a certain 'Dr. Weevil', as a good place to get hard statistics from. i appreciate the information, but i feel forced to call out engram's tunnel vision analysis.
i'm afraid the total effect of arguing with you all here, as in other conservative blogs, has been as you describe in your last sentence. don't think that i always agree with my fellow progressives either. i am an ornery old coot that has a foolish idea that i can think for myself
cheers,
-Anon, a Mouse
Mr. Mouse makes some very intelligent arguments and is a lot less snarky with this post. Thanks. Of course he's correct that the president has little or no effect on the economy, and that people are weirded out by housing prices (and now housing crashing) and energy costs. It's a changed world- China and weren't the same economic rockets 7 years ago either. That's across all commodities- copper, etc. The global economy is on, but still, we have a really good economy despite these things, so why the big pessimism all the time? People do work too hard here, but that's their problem. High commodity prices- get used to it, there's a lot of competition for those resources (and it will continue to grow alt energy economies which in turn might spur the economy which we all think is a good thing). High housing prices? People had the fever- now they will pay the price. Maybe they'll be smarter about it next time (I'm not holding my breath there, but I'll try to out smart them again).
Liberal media not a deal? C'mon man, seriously. Do you know anyone in the media? I know many, many. All of them are liberals, and yes it colors almost everything from AP to Reuters (especially those). Sure conservatives have a lot of opinion media, but we have very little of the other stuff. Why can't they all be like McNeil/Lehrer was? I dunno- but they aren't even though they think they are. Too bad for all of us. I have to wait 3 months for Terry Gross on NPR and the NY Times to talk about "recent" reports from Iraq. I read that stuff here three months ago- that's not recent. Thanks again for your hard work, Engram.
"...and how come watching fox news isn't turning me into a republcan?"
Aaah but this is how it starts, first you find yourself yelling at fox news, then you start leaving argumentive comments on conservative blogs, then you notice the BDS at too many progressive blogs and by then it's too late, Reason flashes it's sweet light.
Aaah but this is how it starts, first you find yourself yelling at fox news, then you start leaving argumentive comments on conservative blogs, then you notice the BDS at too many progressive blogs and by then it's too late, Reason flashes it's sweet light.
dream on - i'm 53 years old and a software engineer - i do, you know, have to be extremely logical and ruled by facts everyday. that's why i'll never be a republican
:-)
-Anon, a Mouse
Mouse stupidly said;
"i do, you know, have to be extremely logical and ruled by facts everyday. that's why i'll never be a republican"
Sounds like prejudice...
Republicans and Liberals can both be extremely logical.
No single group can claim to own logic.
Your logic is faulty.
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