January 27, 2006

Soft! Slowest! Weakest! Meagre! Tepid! Tumbling!

I must assume you are all shocked, shocked to see that the MSM have leapt upon the "soft" economic figures from the Commerce Department like a starving chick gulping a juicy worm. (As a sad aside, it must be nerve-wracking to be an editor on a major newspaper -- having to spend all day, every day hunting for the least bit of bad news for Bush you can find, in a state of incipient panic that today something good might have happened... and might be wrongly attributed by the rabble to That Man.)

And I must also conclude the fellows who brought you the story assume you will not read beyond the first couple of paragraphs; because if you dare, you will wonder at the end how they got the headlines they did.

First, of course, those all-important headlines. I have added the necessary punctuation:

Growth pace weakest in three years!

The U.S. economy ended 2005 on a surprisingly soft note as consumer spending grew at the slowest rate since 2001 and businesses were less eager to boost investment, a government report on Friday showed.

The Commerce Department said gross domestic product, the broadest measure of economic activity within U.S. borders, expanded at a weak 1.1 percent annual rate in the October-December period -- little more than a quarter of the third quarter's 4.1 percent rate.

It was the weakest growth rate for any three months since 0.2 percent in the fourth quarter of 2002 and much below what Wall Street had anticipated, and initially sent stock futures and the dollar tumbling and bond prices soaring.

I'm not quite sure how 4Q05 can have grown "at the slowest rate since 2001" and also suffered "the weakest growth rate for any three months since 0.2 percent in the fourth quarter of 2002," but let that go. Either way, it means there has been at least thirty-six months of steady growth -- right? And pay attention to that keyword "initially" in the last paragraph.

Lackluster economic news adds to Bush's woes!!!

A surprisingly tepid report on the U.S. economy brought new perils to President George W. Bush as he prepared to unveil his 2006 agenda and struggled to help vulnerable Republicans in a congressional election year.

The meager 1.1 percent gain in U.S. fourth-quarter gross domestic product, reported by the Commerce Department, threatened to undercut Bush's argument his tax-cutting policies had set the stage for a thriving economy.

The GDP growth was the weakest in three years and marked an abrupt slowdown from the third quarter's 4.1 percent pace.

I will continue to quote more or less randomly from these two stories without bothering to distinguish them; it's really just one story split in two chapters -- which the MSM believes should be titled Chapter 11 and Chapter 13, naturally.

I suggested you should pay attention to the word "initially," as in "initially sent stock futures and the dollar tumbling and bond prices soaring." Because the very next few grafs read:

But later data showing a pickup in new home sales in December, together with speculation that some of the fourth-quarter slowdown might prove temporary, helped stocks rally strongly as the day wore on.

The Dow Jones industrial average ended up 97.74 points at 10,907.21 while the high tech-laden Nasdaq composite index added 21.23 points to close at 2,304.23. Strong earnings reports by blue-chip companies Microsoft Corp. and Procter & Gamble Co. stimulated buying.

Bond prices steadied after early volatile trading. By the end of the day, the 30-year U.S. Treasury bond ahead 5/32 in price to yield 4.696 percent against 4.707 percent on Thursday.

Benchmark 10-year notes, which jumped as much as 10/32 after the GDP report, were 1/32 higher and yielded 4.519 percent, down from 4.525 percent late on Thursday.

This is the part where you are permitted to shake your head. Had the president been one of those D people, rather than an R, the headline would have read Early 2006 Economic News Boosts Moderate Fourth Quarter Growth. I still haven't figured out which players in the MSM actually still believe they are impartial and unbiased and cannot understand why anyone would say otherwise -- and which ones know they are as partisan as Ted Kennedy but just cynically believe they can maintain the charade for the rest of their careers.

There are of course reasons why 4Q05 would be soft -- the Hurricane Katrina aftermath being chief among them, but also residual effects (on industry) of the high gas prices in summer and fall. But it's really irrelevant: the economy moves up and down by its very nature, which is why we pay more attention to the annual growth rate, not the rate in a particular quarter. Over 2005, GDP grew at 3.5%, which is very healthy and respectable and in fact much more pleasing to the Federal Reserve than 2004's somewhat breakneck growth of 4.2%. The Fed is far less likely to raise interest rates again in March if growth remains between 3% and 4%.

According to the Bureau of Labor Statistics Household Survey, total employment rose 2.6 million from December 2004 to December 2005 (an increase of about 2%); the percent of the labor force employed rose from 62.4% to 62.8%.

The Payroll Survey (a.k.a. the Establishment Survey) shows an increase in payroll jobs (this doesn't include the self-employed or those employed by recent startups) of 2.0 million jobs from December to December (seasonally adjusted) with every single sector of employment rising -- including manufacturing. This is excellent news; if it continues, Bush will finish his administration having added about 10 million new jobs -- despite inheriting a recession from his predecessor, inheriting bin Laden and 9/11 from his predecessor, and fighting two major wars.

John Snow is absolutely correct:

Administration officials rushed to play down the latest GDP number, with Treasury Secretary John Snow and White House economic adviser Al Hubbard hitting the airwaves to insist the expansion was solid, job growth was strong and businesses were healthy.

"By virtue of every index of economic performance, we're going the right way," Treasury Secretary John Snow told a Vermont talk radio show.

People will believe what they choose to believe. I know for a fact that many liberals literally believe "we're in the midst of the worst economic downturn since a Republican caused the Great Depression." But I suspect that when people and their friends and neighbors are all personally doing well and have been for years, that they will not attach much voting significance to the economy -- no matter what they have been brainwashed into believing.

National security, however, is another issue entirely... one that, once again, will be the major theme of the 2006 elections, to the distress of one side of the aisle and the delight of the other.

But I must end on a high note. I absolutely love this grudging admission:

"If the first quarter is weak as well, this could pose some problems for Republicans," said Kenneth Mayer, a political scientist at the University of Wisconsin. "There's a lot of latent unhappiness out there...."

Mayer noted that blows to the economy from Hurricane Katrina and higher energy costs could mean the GDP figure was little more than "blip" whose impact would be short-lived.

So far, he said, "We are not talking about a recession."

Well that's mighty big of you, Mr. Mayer... considering that what we are talking about is GDP growth: most folks still define a recession as having actual, you know, shrinkage -- and for three quarters in a row. So yes, I suppose I would be forced to agree that twelve straight quarters of economic growth would not normally be associated with a "recession."

No matter what Howard Dean will have said by October.

Hatched by Dafydd on this day, January 27, 2006, at the time of 5:44 PM

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The above hissed in response by: KarmiCommunist at January 27, 2006 7:26 PM

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