4th quarter GDP numbers: Your Spidey Sense was right

Percentages - CC from Compfight.com
Percentages - CC from Compfight.com

WASHINGTON, March 3, 2014 — The government’s release of fourth-quarter GDP numbers last month created a great deal of excitement and was highly touted by the Obama Administration. The 3.2 percent annual increase in economic output was trotted out as proof of the Obama recovery.

At the time, there were suspicions of opportunistic and bogus statistics mongering. The release seemed deliberately trumped up to raise President Obama’s flagging approval numbers and give Democrats talking points on CNN.

Subsequent data provides vindication of that view. A February 28, 2014, UPI release announced:

The U.S. economy grew at an annual rate of 2.4 percent in the fourth quarter of 2013, the Commerce Department said in a revised estimate Friday. With gains in consumer spending less than previously believed, the department lowered its economic growth estimate from 3.2 percent, the figure released last month.

The second estimate of the real GDP is 0.8 percent, or $32.7 billion, reflecting downward revisions in spending, private inventory investment, exports and state and local spending, the report said. The revisions were mostly expected. In the previous quarter, growth reached 4.1 percent in the final estimate.

That revisions were “mostly expected,” is, if not an outright lie, nothing less than deception. None of the reporting, whether it was on NPR or in AP bulletins or on any other mass media channels, bothered to caution the listener that revisions could be expected. They never do. That detail is considered an unnecessary nuance. If the government’s economic performance were regulated in the same manner as that of a securities prospectus, much of the recklessness of the Commerce department’s Bureau Of Economic Analysis would be forbidden.

The mass media have repeatedly provided deceptive economic reporting during Obama’s tenure, whether it has to do with the cheerleading on misleading jobs reports or touting the irrational exuberance in equities markets driven by Quantitive Easing and nothing else. These reports have no credibility with the big players in the over heated equity markets, who realize that what ever numbers are reported, revised or otherwise, don’t reflect the overall health of the economy; they are intended to bolster confidence in smaller investors.

The inflated initial GDP numbers are also intended to entice consumers to leverage up, taking on more household debt, buying more ephemeral junk imported from China and  committing themselves to home purchases that may be unsustainable when the banks begin deleveraging again and the next asset bubble bursts.

This report on the revision of the ginned up initial estimate of fourth-quarter GDP will not be announced in anything but the most muted of tones, because the truth about the Obama recovery is nothing to blow one’s horn about.

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