Early Warning Systems Broken

 

Is the U.S. on the verge of a lost decade?

... markets rallied on July 27 on news of the anemic 1.5 percent growth number, claiming it had beaten expectations.

But everyone should be taking the Bureau’s advance estimate with a big grain of salt. 

 

GDP numbers through the first half of 2008 failed to show that we were in a recession, when in reality the downturn had already begun at the end of 2007.

Once again, the economy is visibly slowing down, but are we already in another recession? At best, we’re at stall speed, but we may already be contracting.

In fact, in 11 of 16 economic quarters from 2008-2011, the Bureau’s advance estimate of GDP has been revised downward. As a result, there is a greater than 68 percent likelihood that July 27’s 1.5 percent growth number too will be lowered.

 

On average, in the past 4 years, the Bureau’s advance estimate has been revised downward by 1.1 percent for every quarter represented.

Our early warning systems are broken, and economists are left only to extrapolate that we are in serious trouble.

Meanwhile, Obama has done nothing to get the economy back on its feet. His only plan is to raise taxes on job creators, wage his war on business, and spend us into oblivion....

 

Comments

[Mannie Sherberg]

The market pays far too much attention to labels. As long as no one has said -- out loud -- that we're in a "recession," the market blithely ignores reality and pretends everything is hunky-dory. Everything is not hunky-dory; we are -- with or without a label -- in big-time trouble -- what Yiddish-speakers used to call "gehakteh tzuris" (chopped-up trouble). What's getting chopped up, of course, are millions of ordinary lives which may never recover from the ravages and despoliation of the Obama years. Are we on the verge of a lost decade? No. We are right smack in the middle of a lost decade. When the market finally catches on to that simple truth, the Dow numbers will look like "gehatke leber" (chopped liver).

[Mannie Sherberg]

Apologies for the atrocious spelling in the last sentence. The word is "gehakteh."