I had to shake my head when I read about the latest GDP numbers today.
The news is good, maybe even great for the economy – a 3.8% upward spike in gross domestic product for the second quarter (the numbers were revised from the original GDP estimates, and were light years ahead of the 0.6% GDP rate in Q1, 2007).
So . . . good news, right? Not if you’re rooting for a recession, as the mainstream media appears to be. I’m not sure if it’s the media’s intense hatred of President Bush or what, but the wire service report out today all throw water on the positive economic news stemming from the revised GDP number.
The GDP number is the leading economic benchmark financial eggheads use in measuring the relative health of the U.S. economy. Simply defined, gross domestic product is the value of all goods and services produced within the United States and is considered the best barometer of the country's economic health.
So what do the wire service reports lead with? If you thought the positive GDP number, guess again.
Yahoo.com runs the story this way:
"New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump."
"Sales of new homes dropped by 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000 units. That was the lowest level since June 2000, when sales clocked in at a pace of 793,000."
"The home sales report came on the same day that the government reported a relatively brisk business growth rate in revised figures for the second quarter. But the 3.8 percent pace was less than previously estimated and it occurred before the credit crisis and its repercussions across the broad spectrum of the economy had taken hold."
Granted, the news on home sales deserves to be spotlighted. But home sales are not the defining benchmark on the health of the economy. The GDP number is.
So why is that number buried in the third graph of the Yahoo story, and only then mentioned with a caveat about how the 3.8 GDP number “was less than previously expected” and occurred before the credit crunch hit? Oh, really?
I’ve been writing about the housing bubble all year, as many business writers have done. But according to the yahoo’s at Yahoo, the credit crisis is a brand new entrant on the economic scene.
The stock market certainly didn’t react with the same pessimism. The same hour the wire services stories came out, the market was trading up 20 points or so.
You have to get down to the bottom third of the story to get the real deal on the strong GDP number.
"The economy's 3.8 percent growth rate in the April-to-June quarter was the strongest showing in just over a year. Although the new reading for the second quarter was slightly less robust than a previous estimate of a 4 percent growth rate, it nonetheless marked a substantial improvement over the feeble 0.6 percent growth rate registered in the prior quarter."
But don’t pop the champagne corks just yet. The next graph is a pessimist’s dream.
"The increase in the rate of growth, though, is likely to be fleeting. A deepening housing slump and a painful credit crunch since the spring has darkened the mood of individuals and businesses alike. That has led analysts to predict that economic growth has slowed considerably in the quarter that ends Sunday."
Okay, watching the mainstream media break the pom-poms and root, root, root for a recession is hardly new. More or less, the media has been using the “R” word ever since President Bush took office. With continued economic growth, a strong stock market and jobs market, and solid corporate earnings over the past six years, it’s been fun watching the naysayers twist themselves into pretzels trying to explain how they got it all wrong, time and time again. And they’ll be wrong again. As the old saying goes, the experts in the media and in academia have correctly called nine of the last three recessions.
So take news reports like this with a grain of salt.
But you have to love how the Yahoo story ends. After bashing the economy and pouring cold water on the revised GDP numbers, it ends with this slap at the White House.
"President Bush, meanwhile, is continuing to get low marks for his economic stewardship. Just 37 percent approve of his handling of the economy in September, down from 41 percent in August, according to an AP-Ipsos poll."
Gee . . . I wonder why?