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When Is 3.5 Truly 2.2?

By Larry Doyle on December 23, 2009 at 10:45 AM in Current Affairs, Economy, Sense on Cents (Larry Doyle blog)

Maybe it’s modern math or maybe it is a government truly driven to put a positive spin and review on every piece of data on our economic landscape. The initial 3rd quarter GDP report released two months ago indicated that our economy expanded in the 3rd quarter at 3.5%. That report was met with tremendous fanfare, flag-waving, bells, whistles, and back-slapping in Washington. Well, now that the dust has settled, the 3rd quarter GDP report has been revised twice to indicate a final expansion of a mere 2.2%. Yes, a full 37% negative revision.

What happened?

Bloomberg highlights this story in writing, “Economy in U.S. Expanded at a 2.2% Annual Rate in Third Quarter”:

The economy in the U.S. expanded in the third quarter at a slower pace than anticipated as companies curbed spending and cut inventories at an even faster pace, reductions that have set the stage for an acceleration in growth.

Set the stage? Are we to continually believe that future economic statistics will be better than today’s when financial losses across a wide swath of our economic landscape are forever disguised or extended?

As much as many on Wall Street and in Washington would like to dismiss the concept of a ‘new normal economy,’ the fact is our economy has massive structural flaws which will not be corrected in short order.

These flaws have led our economy and our country to an over reliance on borrowed funds and short term fixes.

While 3.5% looks good on the surface, when 2.2% comes out in the wash, where is the drum and bugle corps?

When will we begin to embrace the virtues of truth, transparency, and integrity? Perhaps then our structural flaws will begin to abate and confidence may begin to rise.

oowawa

Fudged government statistics–whether in unemployment or GDP numbers, the government has learned to massage (lie about) the figures in order to stimulate the stock market and make the voters feel better about the administration. When BTE (better than expected) statistics are reported in big-font headlines, the market shouts Hallelujah! and rallies upwards. Later, when the revisions knock these numbers down, the MSM buries it on the back page and the market shrugs it off. So Rah Rah Rah–Go GoldmanSachs! Let the high-frequency trading supercomputers roll on! You’ve got government statisticians working for you, and your “risks” will be covered by government bailouts backed by Joe Blow on Main Street . . .

Thanks for the very pertinent article, LD.
The Real HC

This “reductions that have set the stage for an acceleration in growth” seems to be a new meme.

I was listening to a radio program this morning in which an “economic expert” was attempting to explain to a host of bewildered callers that low inventory levels in retailers meant the economy was all better.

The economic expert explained that shoppers would not find what they wanted on the shelves during this holiday season, so retailers would panic, and suddenly stock more items and hire more people to sell all these new items.

The program hostess was working this angle with the expert for all she was worth, but it simply was not “selling”.

Many of the callers were not planning on shopping much at all this holiday season. Most were experiencing underemployment or unemployment and feeling the pinch – some in truly terrible ways.

Yet the “economic expert” droned on and on about how these folks were not finding what they wanted on the shelves due to shrinking inventory – and that this was a good sign.

We live in bizarre times when GDP being worse than initially calculated (invented?) is supposed to be good news.

Exactly how much of this 2.2% (and falling) they are crowing about is related to direct government stimulus (C4C and the home buyer credit)?
WMCB

What is interesting to me is that while this is the biggest so far, almost ALL the numbers that have come out over the past months, whether unemployment or business growth or consumer spending, or the status of banks, retail sales, etc have later been quietly revised downward.

Statistics aren’t perfect, and mistakes get made. But what are the chances that those revisions would all end up being worse, not better, if it were mere mistakes or “more information”? If that were the case, you’d see some revised to be worse, some revised to be better. But almost all the revisions have been negative.

That doesn’t happen by chance.
http://www.hillaryis44.org/2009/12/23/april-in-december/ April In December — Hillary Is 44

[...] Obama flim-flams are very easy to predict. If Obama says it’s a sunny day, look out your window because it is snowing or raining. If Obama says “I didn’t [...]
lark

I appreciate this posting LD and the way it was written. I would like to answer your question: What happened?

What happened is that when this lie was put forth, the stock market gained considerable growth in stock value. Gold probably then remained steady since the investors perse know that the government over estimated and was lying. If investors would have been naive about that number then gold would have dropped big time. Now when the revise figure comes out, gold can resume its upward movement and the stock market can get their bonus and fat checks.

Remember my friend that IBM sold its personal computer division to China.

Remember that 1) the computers used to make that the initial estimate were Super super mega duper IBM computer build for millions and millions of dollars for the government and the treasury; and 2) those are the same computers that compute the later figure also.

Ask yourself how come the formula or set of equations and statistical data computed an error to begin with? Are the IBM computers junk? No they are not junk, the equations are not made by IBM perse but probably by RAND and other financial institutions and willfully put in operation by the treasury.

Ask yourself, if an error was made in the third quarter of 2009 (which by the way, errors in every quarter as far as IBM and Rand etc. have been in cohort with the government to produce these reports) would a bright mathematician from MIT get to work to revise the equations that made those kind of mistakes? Never.

Then: What happened?

Simply: You were stolen some money. I don’t know if they stole from you, but they certainly stole from me. But if they did not stole from you, they certainly stole from other members of your family. The financial system is simply a set of values that steals from each and every individual that is not connected to the mother-sucker.
lark

What is the connection between IBM and their super duper mega power computers build for governments all over the world for millions upon millions and more millions relate to corporations/institutions like Rand, etc, etc, and universities like MIT, Cornell, Princeton, etc., etc,?
http://www.sonicninjakitty.wordpress.com Sonic Ninja Kitty

Again it’s the same bizarre feeling: I am stunned yet not in the least surprised, all while being too far gone to feel disappointed.

LD, and anyone else who may be interested, I have a post up today that tries to explain some basics of central banking and why it is important to know about the Fed. I would be so happy if you stopped by, gave it a read, and passed it along to anyone you think may enjoy it: http://sonicninjakitty.wordpress.com/2009/12/23/this-ones-for-the-girls/

Merry Christmas!