Obama’s Revised Q3
Obama’s Economic Data Revised Again. Economy expands 2.2 percent in third quarter.
The economy grew at a much slower pace than initially reported in the third quarter, restrained by weak business investment and a faintly more aggressive liquidation of inventories, according to data released today. What a shock! Growth was boosted by the government’s stimulus programs, including cash for clunkers and tax credits for first-time home buyers leaving questions of the sustainability of the recovery once government stimulus wanes. Business investment fell at a 5.9% rate instead of 4.1%. Err, umm, a nearly 50% revision in the numbers! How surprising is that?
A huge contraction of business investment would sure seem to point to the next dip in the ongoing recession. What CEO in his right mind would be investing in this business climate of palpable fear and terrible uncertainty about business costs? I grant you that statistics is not a simple subject, but at some point you have to start questioning the models you are using for your estimates and projections if they constantly result in overly optimistic trends. So… the first report that came out some time ago reported 3rd quarter growth of the economy at 3.5%, then it was revised down to 2.8%, and now it is being revised down to 2.2%. Remove “Cash for Clunkers” and the economy didn’t grow at all. Zilch. Zero. Nada.
Let me repeat that…In October, we received a much lauded 3.5% GDP growth number for Q3. Now after two revisions, we are down to 2.2% Q3 GDP. The last time these numbers were released in Q2 they ended up being revised downward how many times? Twice I think… Read the fine print, this growth (even if these numbers are true) was because of government-induced incentives. A deeper than reported slump in the construction of non-residential structures and stronger demand for imports, which overshadowed the growth in exports, held back growth in the Q3. So, in fact there was little to no actual growth absent this government handout… Let’s see, the economy expanded…but more people are unemployed. Didn’t really compute, did it?
That’s the real story.
Tisk. Tisk. Tisk. Methinks the Obama administration is manipulating the figures to fool and deceive the average snoozing American. Are these experts who say we are rebounding and will continue to rebound factoring in what this health care “reform” will do to us in the coming year? Higher taxes and more regulations will stifle business capital and investment. And 2010 will bring more bad news in the real estate sector too… commercial properties are hemorrhaging and in order to short-circuit major commercial defaults the government will have to step-in with TARP-like funds or TARP-leftover funds. Non-residential building activity dropped 18.4% in Q3 rather than 15.1%, a reflection of the troubles in the commercial property market.
In residential, the percentage of prime borrowers whose loans were 60 or more days past due doubled from the July-to-September period a year earlier too. And, more than half of all homeowners whose payments had been lowered through modification plans have defaulted again. We still have a massive logjam of foreclosures too because all of the banks have been holding back waiting for some kind of magic bullet that is not coming. When the dam finally breaks and foreclosures finally go forward it will devastate the already staggering housing markets and will drive home values further into the dirt.
Maybe it’s just me, but if it is subsidized by the taxpayers…then it isn’t “REAL” growth, right?
Besides Government and collection agencies, what industries are actually expanding? I suppose either way it doesn’t matter. The Obama Administration will fudge the data on unemployment and economic contraction and the “news” media will cover for them and make people think happy days are here again. Apparently, the commerce department is outsourcing economic data calculations and modeling to East Anglia University. But the commies in the government are no doubt thrilled with this direction and will spin it as a need for ever more government control and regulation. Expect a sexy new logo and name for stimulus Round II. We have battened down the hatches and 2010 is a wait and see.
The bloodletting isn’t over yet though. Expect more layoffs in 2010 as the last of the unproductive are shed from the payrolls. Productivity numbers are high now and the productive staffs are working their butts off to keep what’s left of business alive. If firms lose more sales, as expected, in 2010, businesses will be cutting into the core muscle, and that only hurts organizations. Unemployment will stay above 10% through November, 2010. So, we’re merely in recessionary conditions, instead of depressionary conditions. Wonderful.
Prediction: economy will grow 4.6% in the third quarter of 2010. We will hear that number every day for a month from the Obama war lords. In November, after the election, the figure will be revised downward to 1.9%. If the GOP were smart, which they are not, they will communicate this to the mass in hopes of heading-off another economic head fake. Watch unemployment numbers to be deceitfully lower as well. Only to be revised upward later…
Bottom line: Clear evidence that government expansion policies do not translate into economic growth.