1. Both business investment and consumer spending are way down (consumer saving is way up):
Most notably, consumer spending fell a more than expected 1.2%, after a 0.6% improvement in Q1, and even the Q1 blip was merely a function of one-time tax rebates that concluded in May. On an adjusted basis excluding the benefits of one-off consumer fiscal stimuli, the consumer deterioration is truly unprecedented. As Rosenberg puts it:2. Large numbers of people are giving up hope of finding jobs:Business investments continued their downward trajectory after an unprecedented 39.2% plunge in non-residential investment in Q1, to be followed by another 8.9% drop in Q2."Imagine, government transfers to the household sector exploded at a 33% annual rate, while tax payments imploded at a 33% annual rate and the best we can do is a -1.2% annualized decline in consumer spending in real terms and flat in nominal terms? What do we do for an encore? In the absence of the fiscal largesse, it is quite conceivable that consumer spending would have shrunk at a 10% annual rate last quarter!" [Emphasis in linked article - Borepatch]
The unemployment rate dropped 200 basis points, from 9.6% to 9.4%. That's great news. Except that labor force participation also dropped 200 basis points, which is what's propping up those figures. People basically gave up looking for work, and therefore aren't counted as unemployed.Compare and contrast MSM coverage of the economy now with MSM coverage of the economy in 2003.
What I can't figure out is how a bunch of smart, well-educated media professionals simply don't understand Google. It's like they think that once they've written something, it's all over, and nobody will be able to find it.
They also don't understand that some of us now want to find it. Quis custodiet ipsos custodes? We do.
The MSM played a large part in creating this fiscal mess...in their absolute zeal to disparage anything that could be considered good under GW Bush, they basically talked the country into believing that the economy was bad.
ReplyDeleteThey succeeded and their dim outlook became a self-fulfilling prophecy.
Now they're trying to work the exact opposite magic trick...they are trying to convince the populace that the economy is actually good, despite all the evidence to the contrary.
Will they succeed? Time will tell, but I doubt it. The profligate spending of the government over the past 6 months is not going to help things. It won't take much of a downturn to shake the public's confidence again...and several economists and market analysts that I've read are predicting that the bottom's going to fall out of the market one more time before any real recovery begins.
I've already lost about half the value of my investments and retirement savings....just like most everyone else. Another hit like that would be devastating to consumer confidence.
Curt, the Real Estate bubble was, well, a bubble. The press was part of what inflated the bubble.
ReplyDeleteAlan Greenspan is not looking so hot now, and the press talked him up over the last 20 years.
Net/net, I don't think the press talked the economy into the tank; I think the bubble popped.
But you're 100% right about them giving us a diet of Happy Ears under Obama.
I agree about the housing market...but I most definitely think that a lot (not all) of the lack of consumer confidence which began prior to the housing bubble bursting and continues through today, was caused directly by the media talking down the "Bush" economy.
ReplyDeleteOur economy is built on consumerism. Whether you think that's a good thing or a bad thing, it's the truth.
People in this country have jobs because other people purchase the goods and services that they produce.
At the beginning of the economic downturn, the only thing that changed was perception. People began to perceive that the economy was weak, so they cut back on discretionary spending. Cutting back on spending meant that companies weren't making as much money, so they began to cut back on production and costs...meaning, people started losing jobs. As the news about job losses started coming in, the impression that the economy was weak grew, people became afraid that they were going to lose their jobs, and tightened the belt even more. Spending decreased, which decreased profits.....
Then the housing bubble burst and the economy really started tanking in earnest.
But really, how much actual impact did the housing market have and how much of the disastrous effect was caused by people who weren't directly effected...people like me...cutting back spending and increasing savings because of the perception of an uncertain future?
Sure, a small number of people lost their asses in the speculative market on housing or through taking on unwise risks on their own housing purchases. And a number of big banks had trouble because of their portfolios heavy in these types of risky mortgages...but did that REALLY affect the economy enough to reach the result that we did? Or was it the PERCEPTION by the average joe that we are in trouble and it was time to cut back on spending?
And...how much of that perception was actively cultivated by the media with their determination to undermine anything Bush and general penchant for sensationalistic news coverage?
At any rate, the economy is way to complicated and fickle to point to any one thing and say with any kind of certainty "there's the culprit!", but the media working overtime to undermine consumer confidence over the past several years surely didn't help anything.
And now they keep insisting that things are looking up when they clearly are not.
Go figure.
It's merely old think from the Dinosaur Media. Just as the dinosaurs didn't have the capability to see the end coming, nor do the dinoreporters of the won't-be-extinct-soon-enough media.
ReplyDelete