The Bureau of Economic Analysis has produced its first estimate of 2nd quarter 2012 growth in the United States. Expectations were for an increase of 1.2%; the BEA estimated an increase of 1.5%.
More interesting are the revised estimates for previous quarters and years. The first quarter’s growth was revised upwards slightly from 1.9% to 2%. 2009 growth was re-estimated upwards very slightly, 2010 growth re-estimated downwards very slightly, and 2011 growth upwards very slightly. From 2008 through 2011 real growth has increased an average of .3% per year. That compares with the longterm average real growth rate of 2%.
From an economic standpoint it’s increasingly clear that whatever they call what we’re in it’s actually an L-shaped recession. Real growth is all but flat and has been for the last three years. It’s similar to what Japan has experienced following its balance sheet recession, ongoing for twenty years. The traditional driver of economic recovery, housing, is no longer on the floor and a drag on GDP but it is unlikely that it will resume its importance in producing increased economic growth any time soon.
Politically, the news is not as bad as it might have been but the White House must surely have been hoping for something better. Many econometric models for predicting popular vote outcomes depend heavily on this BEA report. 1.5% growth means too close to call.
The upside, of course, is that the economy is not actually deteriorating. The downside is that it’s growing too slowly to bring the millions of unemployed back to work. Further, the emerging picture of economic activity in the U. S. undercuts the administration’s explanations of what happened somewhat: what really happened is that their policy responses were inadequate to the actual economic situation. The administration will, of course, continue to blame that on its predecessor but certainly that excuse must have a sell-by date which has already passed.
There’s an old engineering wisecrack: a pessimist says the glass is half empty; the optimist says the glass is half full; the engineer says you need a smaller glass. Unfortunately, we now have a smaller glass.
Update
James Pethokoukis says that when you plug the latest GDP growth figures into Ray Fair’s econometric model of presidential popular vote outcomes, it predicts a Romney win:
And when you plug these new numbers into the election forecasting model of Yale University’s Ray Fair — assuming next quarter is no better than the past two — it shows a 4-point Mitt Romney victory over Barack Obama (in the two-party vote totals).
Dr. Fair should have an update of his election projection within the next few days. I’ll wait for that.
From an economic standpoint it’s increasingly clear that whatever they call what we’re in it’s actually an L-shaped recession.
That’s been clear to a lot of us former middle class people for some time now. Not so to our evil rulers.
This past Monday I had a state representative tell me how proud he was that Florida’s UE-3 rate had dropped from over 12% to about 8.5%. It was all I could do to not punch the son-of-a-bitch in the face. At the very least I wanted to shout at him that almost the entire drop has been because of people dropping out of the workforce. But I restrained myself because he was there at the invitation of a colleague and I didn’t want to cause HIM any embarrassment. (See, I can think of the other guy.)
Almost our entire leadership class is comprised of self-satisfied morons, crooks and liars. We could do worse than to have everyone in elective office put in jail for the rest of their lives. We couldn’t do much better, unfortunately.
what really happened is that their policy responses were inadequate to the actual economic situation.
They weren’t inadequate, that implies they simply weren’t large enough. They were simply wrong. They pumped up the financial sector at the expense of everyone else. (Smaller failed institutions that were already too big to fail have been made bigger still.) They pumped up the federal government at the expense of everyone else. They tried to forestall the shrinkage of the state and local governments at the expense of everyone else. They’ve pumped up the Medical-Industrial-Government Complex at the expense of everyone else. They have done nothing effective to help citizens with their debt problems. They’ve altered laws by fiat in order to help out their friends and punish their enemies. (See the GM bailout.) In fact, by encouraging more people to take out even more student loans, they have pumped up the Education-Government Complex at the expense of everyone else, especially those poor saps that thought education would make them employable. They’ve decided to make energy more expensive in order to give graft to their friends, whose only hope of making money is for government graft + expensive energy. They’ve given the IRS more power while making the tax code even more Byzantine. (All due apologies to the old Eastern Empire.)
Exactly which of those policies were designed to do anything but help the bastards in charge at the expense of the rest of us? Which of those policies had any hope of doing anything OTHER than harm?
And here’s the worst of it: This is all according to plan. The current Administration actually has told us that this is exactly what they wanted. “The private sector is doing fine.” “We tried our plan – and it worked!” They want exactly this kind of misery. And those of you that voted for Obama in 2008 wanted it too, and you want more of it because you are all going to go out and vote for the son-of-a-bitch again. Thanks a lot.
I think you need to be less shy, icepick, and tell us what you really think.
My intention was to be inclusive of strategies that were the wrong direction and strategies that were the wrong size.
Your polemic is actually an understatement if anything. Big banks got bailouts; small banks got subsumed into bigger banks—an aggravation of an obvious problem. Money was actually siphoned from programs intended for relief of homeowner debt into bank subsidies or used to bail out GM.
Your polemic is actually an understatement if anything.
I had to take my daughter to the park before the heat index hit 100. As it was I failed, as we probably passed 100 on the HI by 10:00 am this morning. A hot day by Florida standards.\
Money was actually siphoned from programs intended for relief of homeowner debt into bank subsidies or used to bail out GM.
yeah, this is called “bailing out the little guy” by people like President Obimbo. Anything at all to make certain the President’s big money backers get more money from the federal government. As TastyBits likes to say, if other criminals did this they’d be put in jail.
I think you need to be less shy, icepick, and tell us what you really think.
If I did that I’d be in jail.
The funny thing is that I’m an introvert. It’s funny because people don’t understand that introversion is not the same thing as being shy, so they constantly get bowled over.
But hey, the good news is that the people who manipulate the markets have been going gang-busters the last two days, because the ECB guaranteed “The Euro today, the Euro tomorrow, the Euro forever!” yesterday and the wet blanket Schauble wasn’t around to be a wet blanket. And with today’s news about anemic growth (who wants to bet that it only looks this good because of a ridiculous deflator hiding in the equations?) guarantees that The Bernanke has the helicopters warming up to drop another trillion dollars on the market. Happy days are here again.