An Orwellian Twist
Yesterday, I wrote a post The Contraction Watch citing Rick Davis' work tracking on-line durable goods orders as it relates to GDP. Today, the Commerce Department (BEA) revised all GDP numbers for the last three years. In an Orwellian twist, we now learn that the Great Recession has been much deeper than previously thought—
The world’s largest economy shrank 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009, compared with the 3.7 percent drop previously on the books, the Commerce Department said today in Washington. Household spending fell 1.2 percent in 2009, twice as much as previously projected and the biggest decline since 1942.
The BEA's revisions were based on more complete information—
The estimates released today reflect the regular annual revision to the national income and product accounts (NIPAs), beginning with the estimates for the first quarter of 2007. Annual revisions, which are usually released in July, incorporate source data that are more complete, more detailed, and otherwise more reliable than those previously available.
In The Contraction Watch, I cited the annual growth rate of GDP for the first quarter of this year (2010 Q-I) as 2.7%, only to discover at 8:30 this morning that it was now 3.7%! It had started out at 3.3%, then became 3.0%, and the "final" revision was 2.7%. But not anymore!
In other words, they raised the most recent quarter's growth rate (among those they revised) a full percentage point, which also happens to be the quarter they know least about. You would think the economy was booming from January through March of this year. On the other hand, 7 out of the 8 quarterly rates during the years 2008-2009, which now lie safely in the remoter past, were revised downward or showed no change. I'll have more to say about this in a future post. Fool me once...
Oh, by the way—today's number for the 2nd quarter is 2.4%, which is being reported as a "slowing" of the economy... Yeah, right... we're in the midst of a "modern day" Depression, says Dave Rosenberg.
The Times Figures Out What A Dead Zone Is
It's always a treat when the New York Times discovers the obvious. One of my more "popular" posts was The Gulf Of Mexico Before The Oil Spill, in which I discussed the ongoing environmental damage in the Gulf, including coastal erosion, hypoxia (low oxygen) and harmful algal blooms(red tides). Now along comes the Times' Gulf of Mexico Has Long Been A Dump Site For Industry—
Loulan Pitre Sr. was born on the Gulf Coast in 1921, the son of an oysterman. Nearly all his life, he worked on the water, abiding by the widely shared faith that the resources of the Gulf of Mexico were limitless...
The gulf has changed, Mr. Pitre said: “I think it’s too far gone to salvage”...
Now that the oil on the surface appears to be dissipating, the notion of a recovery from the spill, repeated by politicians, strikes some here as short-sighted. The gulf had been suffering for decades before the explosion of the Deepwater Horizon rig on April 20...
Runoff and waste from cornfields, sewage plants, golf courses and oil-stained parking lots drain into the Mississippi River from vast swaths of the United States, and then flow down to the gulf, creating a zone of lifeless water the size of Lake Ontario just off the coast of Louisiana...
There's more Good News in the Times article.
Colbert Describes Trickle Down Economics
The Obama Administration says it will let the Bush tax cuts for the wealthy expire at the end of the year. This has provoked outrage from apologists for the rich, including would-be mental patient Larry Kudlow. These tax cuts were supposed to filter down to us according to an economic "theory" the Republicans call supply-side economics. To the rest of us, this brainstorm is called Trickle Down Economics (DOTE, June 11).
Stephen Colbert has some interesting comments on this theory in The Ownership Society...
No real corporations, or the actual people that form them, could really pay attention to this stream of numbers, could they? What's the point of this fabrication of figures? Do programmers use this stream within their HFT algos, to add to the appearance of virtual reality in the "markets?" I really don't get it.
Posted by: Bill | 07/30/2010 at 04:44 PM