Free Markets, Free People

Don’t Tell Anyone, But The Recession Is Still With Us

Despite all the happy talk from the administration and the lap-dog press eagerly parroting the “good news” that the recession is over, the numbers just don’t support the talking point.  Liam Halligan delivers the news:

So I was pleased last week when I heard that, after four successive quarters of contraction, America’s economy grew by an impressive 3.5pc between July and September, compared to the quarter before. “The US is out of recession” numerous newspaper headlines screamed. No wonder share prices surged.

As ever, the numbers warrant a closer look. For one thing, this is annualised data. So the US economy actually expanded by only 0.9pc during the third quarter – a fact most newspaper reports ignored. What growth we did see resulted from a 3.4pc annualised rise in US consumption between July and September, which was in turn caused by a 22.3pc spike in spending on consumer durables.

As mentioned here that “spike” was driven by “cash for clunkers” and the $8,000 first time homeowners tax exemption. Halligan agrees. It wasn’t a trend, it was exactly what Halligan reported – a spike. So digging into it, what are the real numbers?

In other words, this latest US growth spasm stemmed from one-off government “giveaways” – with the public only able to take advantage of such gimmicks by going deeper into debt. The rise in US consumption coincided with a 3.4pc fall in household disposable income and a plunging savings rate too. With government and household debt spiralling anew, America’s so-called “return to growth” is nothing but a return to higher leverage. [emphasis mine]

Not quite what the administration cracked it up to be, is it? And Halligan reminds us:

Over the last 40 years, all US slumps have been interrupted by at least one quarter of positive growth, followed by a renewed downturn.

Of course, with an administration desperate for any good news, ignoring history is to be expected. After all, they’re quite the masters at ignoring the laws of economics and expecting results which run counter to them, aren’t they? Why shouldn’t they believe that one quarter of government give-aways equals pulling out of the recession? Can’t wait to hear the excuses when we’re back in the negative GDP growth trend next quarter. And you can also expect to hear the inevitable cries for a second stimulus (Porkulus II) crescendo.



4 Responses to Don’t Tell Anyone, But The Recession Is Still With Us

  • After claiming success, the administration will be hard pressed to now blame Bush for any subsequent economic bad news…

  • McQAfter all, they’re quite the masters at ignoring the laws of economics and expecting results which run counter to them, aren’t they?

    And they’ve got an equally (willfully) ignorant MiniTru on their side that is happy to put the best possible spin on bad news when it can’t be outright ignored.  I was mildly happy to note that CBS and even Katie Couric reported that the stimulus job numbers are (ahem) questionable, but my hopes that MiniTru’s role as Imeme’s cheerleaders were dashed by the sight of many, many headlines that merely regurgitated the White House’s ridiculous claims that a million jobs were “created or saved” this year.

    What nonsense!

    If, as it seems likely, the economy does do a double dip, it will be interesting to see how MiniTru reports it.  Perhaps some more “analyses” about the joys of “funemployment”?  How about some reports about industries that are doing well during the downturn (pawn shops, payday loan companies, repo firms, etc)?  Or maybe we’ll see a spate of reports about the “new” economy; you know, the one where 10% unemployment is perfectly normal?  Natch, we won’t see criticism of Imeme’s policies or any reminders of how he and his thugs predicted that unemployment wouldn’t go above 8% if we passed Porkulus.


  • We are looking at a deepening, decade long depression now, because the government has done nearly everything wrong.  It might be shorter if we can get some new leadership in a few years, but I am not hopeful.