The GDP’s hilarious (false) numbers
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JOHN CRUDELE
I’m going to write a hilariously funny column about the relationship between men and women, about life at the beach, Major League Baseball and adorable pets — but not today.
Today I’m writing about the GDP — the gross domestic product, the gauge by which Washington measures all the business done in this country. I know that if I told you straightaway that I was going to write about the GDP, you would have immediately turned the page — but now that I have hooked you into thinking this column is going to be fun, I got you, at least this far.
But wait, there’s more. In fact, the GDP can be awfully amusing — in its own way. For example, did you know that virtually all economists and members of the media are still eating crow — the feathers and all — because they believed statistics put out by the Commerce Department since the Great Recession were reliable and truthful.
Those numbers were neither. And late last week, Commerce lowered its GDP figures for the last six years while also producing more statistics for recent quarters that will someday need to be corrected.
There’s no crow on my plate. I’ve been telling you for a long time that the economic statistics produced by Washington were unreliable and inaccurate — sometimes purposely so.
So what does Commerce now think about the economy? It says growth has averaged just 2 percent annually over the last six years, and not the 2.3 percent it previously reported.
But you know what? Both those levels of growth are lousy by historical standards. But with the correction, the worst economic recovery in 70 years is now officially even weaker.
The revision made to the GDP in the third quarter of 2012 is worth special attention that nobody else has given it. Remember, 2012 was the year of the last presidential election. And the third quarter — July, August and September, with the GDP number announced in October — was smack in the middle of all the action.
Commerce said in that October, just weeks before the election, that the economy was growing at an annualized rate of 2.5 percent.
Now Commerce has corrected the third quarter of 2012 to just 0.5 percent. So Commerce overstated growth in this very important period, as Americans were about to go vote — by a magnitude of five. Commerce said the mistake was caused by changes in “methodology,” especially in the way it deals with defense spending. Seasonal adjustment changes also had an impact.
Growth in the fourth quarter of 2012 was just 0.1 percent. So when you put the third and fourth quarters together, the country was alarmingly close to officially being in a recession — a point that no president would want to brush up against when trying to get reelected.
I’m not saying that anyone was screwing around with the numbers just to help President Obama. I’m just saying this is pretty bizarre and, well, funny.
You might also recall that the unemployment rate was enjoying a suspiciously sharp drop in the third quarter of 2012, which also helped out the president.
And as I’ve already documented in a number of columns, at the Census Bureau’s Philadelphia region, a bunch of data-collecting computers — laptops that collect data used to calculate the unemployment rate — suddenly went missing in September of 2012.
Census is the armpit of Uncle Sam’s data operation: Everything it does stinks.
I may not have given you the joy of reading about pets, romance and baseball, but the mental image of economists eating crow is, I hope, a bit chuckle-worthy.
Commerce also said the economy grew at an annual rate of 2.3 percent in the second quarter of this year. Not great — but better than the revised 0.6 percent annual growth in the first quarter.
The trouble is, consumer spending is credited with much of the 2.3 percent growth in the second quarter.
And as retailers will attest, consumers just aren’t spending as vigorously as Washington seems to think.
In fact, a recent poll found that 55 percent of Americans think the economy is getting worse, not better. That’s not the kind of mood that compels us to drop dollars.
So, you can expect the 2.3 percent growth to be revised downward in the near future.
Still, the crow-eaters were happy for temporary good news.
Free up retirement funds
What’s the problem with the US economy?
It’s broken. Washington and the Federal Reserve have nothing left with which to stimulate the economy.
As I’ve been proposing, Washington needs to change the rules on personal retirement plans so that people can productively use some of the trillions they have stockpiled for their old age.
That’ll stimulate the economy in ways Washington can’t.
Wall Street will hate this idea, so Washington will fall in line with that opinion. But the stock market will eventually come around when the economy starts growing better than it has in seven post-recession years.
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