Still No U.S. Recession.
Posted: August 4th, 2008 | Author: Joe | Filed under: Economy | Tags: Economy, news, Opinion, Rant, Recession | 3 Comments »Of course it’s the AP, so we need to hack our way through the misdirections, doom-and-gloom adjectives and distractions to get the real point:
“Last year the economy grew by 2 percent, the weakest showing since 2002.”
They can’t resist throwing in ” weakest showing since 2002″, thus sidestepping the real fact that a 2% growth is NOT possible in a recession! In other words, what they’re saying is: “forget that we’ve been (purposely?) misleading you on the economy for the past 9-12 months, last year was the worst since 2002!”
Pay no attention to the man behind the curtain.
The headline should have been the same as the title of this post, but instead the AP falls back on pessimism:
“Growth weaker than hoped; economy shrinks in Q4″
The real story is this:
“The Commerce Department reported Thursday that gross domestic product, or GDP, increased at an annual rate of 1.9 percent in the April-to-June period.”
Increased.
A recession is a contraction for at least 2 consecutive quarters.
“That marked an improvement over the feeble 0.9 percent growth logged in the first quarter of this year and the outright contraction in the economy during the final quarter of last year.”
I guess good news doesn’t sell, otherwise they’d have titled the article correctly.
So what caused this “unexpected pause” in the recession?
“…sales of U.S. exports grew at a 9.2 percent pace in the second quarter, up from a 5.1 percent growth rate in the first quarter. The weak dollar has made U.S. goods cheaper to foreign buyers, helping to bolster exports.”
This is another aspect of economic reporting that irks me. We’ve been hearing for months how the value of the dollar has plummeted relative to the Euro. But, as with most things, this is not entirely bad. As the quote above illustrates – it makes our goods cheaper in foreign markets, so much so that U.S. Exports grew 80% !
And what about inflation?
“…prices rose at a pace of 2.1 percent, down from a 2.3 percent rise in the first quarter. Still, the second-quarter’s core inflation reading is outside the Fed’s comfort zone.”
I can appreciate that it’s “outside the Fed’s comfort zone.” It’s outside my comfort zone as well, but it’s a far cry from 70′s style, double-digit stagflation that many people seem to think we are experiencing.
Towards the end of the article, the AP does acknowledge:
“There’s been a lot of debate about whether the economy is on the brink of, or has fallen into, its first recession since 2001.”
Maybe we will fall into recession in the coming months. Maybe future analysis will show that we’re in one now. But I’m starting to see more and more analysis acknowledge the “debate” about a recession. This is in stark contrast to the almost clairvoyant-like predictions of the “impending recession” from a few months ago. Personally, I think we will either narrowly avoid a true recession, or it will be a mild one. But who am I to speak on such things? 
Technorati Tags: recession, econonomy
I find it amazing just how much media spin can affect our perceptions of what is really happening. This is a perfect example.
Growth is growth. 2% may not be as strong as some would like, but it’s a far cry from an indicator of an impending recession.
@ MGL:
It never ceases to amaze me how many people are affected so easily. I think it’s the power of repetition. We are literally bombarded by media messages and advertising day in and day out to the point where we become sponges and no longer question anything.
That and I think that critical thinking and analysis skills are not taught in schools anymore. Too many people simply offer their feelings on something because it’s much safer than thinking. After all, an opinion can be wrong but society frowns upon devaluing another person’s feelings.
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