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U.S. Economy at Death’s Door, Knocking Loudly.

Posted on | May 2, 2008 |

From the AP:

“Economy limps ahead at a 0.6 percent pace in first quarter, better pace than expected”

Ever notice how the media never expects reality? It always finds the data surprising or unexpected. It must be part and parcel of living in the echo chamber…

“The bruised economy limped through the first quarter, growing at just a 0.6 percent pace as housing and credit problems forced people and businesses alike to hunker down.”

I LOVE how the media anthropomorphize the economy: Bruised and limping! HA! Sometimes I think journalists are just frustrated creative writing drop outs.

“The country’s economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday.”

This seems to suggest that economic growth is closer to stagnant, not in recession. I guess headlines that tout: “U.S. Economy holding steady” just don’t generate the necessary amount of fear required to sell papers.

“Many analysts were predicting the gross domestic product (GDP) would weaken a bit more — to a pace of just 0.5 percent — in the first quarter.”

I’ll admit, I’m confused about this one. How could “many analysts” have been predicting the GDP would grow by 0.5% if we’re supposedly in the throws of a recession? This seems contradictory to me, but could explain the “better than expected” lead line.

“”The economy is weak but not collapsing,” said Lynn Reaser, chief economist at Bank of America’s Investment Strategies Group. “A recession can’t be ruled out, although the stars are not lined up at this point to definitively say one way or the other.”"

It seems that the economy isn’t quite at death’s door just yet - in fact, it’s probably not even in the same town. It’s more like the Economy is taking a breather after sprinting for a while. Maybe it will pick up the pace again. Maybe it will have to sit down and recoup before plodding on. We don’t know.

But hope and despair spring eternal for the U.S. Media:

“A growing number of economists believe the economy is in a recession and is indeed contracting now.”

I’m not saying the economic picture is rosy. I’m just saying that the great depression isn’t around the corner, even though it feels like it is when we watch too much of the news.

Oh- and don’t be fooled when people try to drum up conspiracy about the GDP really being negative when you factor in the effect of inflation of food and gas prices. Yes, inflation is probably closer to 4% than 2.6% when you factor those in, but it’s not as though the government has just started ignoring these figures recently. To put it another way, if you factor in food and gas price inflation then the number you get is no longer related to previous figures, since those figures did not account for those data. It’s simply moving the goal posts.

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