Some of America’s greatest fiction writers may be employed by Uncle Sam, penning the recovery story.
Last week the Commerce Department reported its first take on Q1. It said gross domestic product grew all of 0.1 percent. But in fact it was even less than that: 0.025 percent. You see, the government permits itself to round its numbers up.
The fact that the US almost didn’t grow at all for the first quarter is frightening, given the growth narrative coming out of Washington.
Now, there are lots of statistics that measure various parts of the economy. But GDP is the only one that measures — quantifies — the output of the entire economy.
It is by far the most complete and most legitimate measurement of how an economy is doing.
For a more fictional take, try the non-farm payroll number, which is becoming an increasingly inaccurate picture of reality.
Take Friday’s jobs numbers, in which unemployment miraculously fell almost half of 1 percent, although fewer people were employed this month than last.
The decline in the unemployment rate was actually the result of an 806,000 drop in the civilian labor force. The number of workers actually employed declined by 73,000.
So, fewer people are working today than were 30 days ago, even though we added 288,000 jobs. The labor force participation rate dropped to 62.8 percent from 63.2 percent.
If the labor force did not decline, the unemployment rate would have increased to 6.8 percent, not the announced 6.3 percent. Last we checked, growing economies employed more people, not fewer.
Even Fed chief Janet Yellen portends the economy is growing and recovering just fine. For Yellen, it’s a story that provides cover for the Fed’s tapering crusade as it pulls back from the bond purchases, known as quantitative easing, that have had a waning impact on our economy’s recovery.
And of course there’s a plot twist in this “recovery” story.
The explanation for the poor showing in the first quarter of 2014 was above-average snowfall in part of the Northeast.
Yes, it did snow more than usual this winter along the Acela tracks from DC to Boston, but it’s not as though it’s never snowed here before. And it was sunny in California, Florida, Texas and Arizona. And in Colorado — as measured at the Denver International Airport — it snowed far
less than usual.
One other thing: Despite heavy snow this winter, the Canadian economy grew just fine — almost 1.5 percent for their first quarter — and it snows all over that country.
To get a nonfictional idea of how this “recovery” is going, just look in your own neighborhood.
Down at the supermarket, more and more retired people have had to take part-time jobs bagging groceries, just to get by.
All the while the Federal Reserve, the administration and the rest of Washington champion their “recovery,” based on cherry-picked statistics or the ever-expanding stock market.
Once you separate facts from fiction, you see that, yes, the economy is better than it was in throes of 2008 — but for the middle class it is not great or even good. It’s just stable.
No better example exists than the quintessential American dream of home ownership. The Census Bureau last week reported that that statistic has plummeted to a 19-year low.
So when you read that the Federal Reserve has a 2.9 percent GDP prediction for 2014, remember that it’s a fairy-tale target. The US would need to post three consecutive quarters that average 3.9 percent growth — something we have been unable to achieve since the recession.
When it comes to predictions, it’s best to let the math speak for itself rather than make up a story for it.