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Lying to yourself

Justin Wolfers at the NYTimes The Upshot is trying not to take the new GDP numbers too seriously:

An economic report issued this morning provides a good example of the hazards facing election forecasters. The Bureau of Economic Analysisreported that in the first quarter of this year, Gross Domestic Product, a broad indicator of the health of the economy, shrank at an annual rate of 1 percent. Even worse, an alternative and more accurate measure, called Gross Domestic Income, shrank at an annual rate of 2.3 percent. If that persisted, we’d call it a sharp recession.

But no one is using the R-word. Nor should they. Markets have taken the news in their stride, and few economists have changed their view that the economy is growing and will continue to through 2014. Likewise, consumers remain confident about their economic prospects. Their confidence rests partly on other indicators that suggested far better growth throughout the quarter, such as nonfarm payrolls, which grew by 569,000 over the same period.

And the economy motored along after that bad quarter ended, with employment growing strongly and unemployment falling in April, and new claims for unemployment insurance falling through May. Importantly, we know that the weakness in G.D.P. is partly due to one-off factors — it snowed heavily, keeping many of us indoors, rather than out making and buying stuff — and it partly reflects influences, like the inventory cycle, that don’t have an enduring effect.

In any case, G.D.P. data are known to be noisy, and subject to a lot of later revision — so much so that the difference between the first and the final reading of G.D.P. growth is typically 1.3 percentage points. For all we know, the recent measured decline in output may be revised away.

But many election forecasters rely on quite mechanical models, linking their forecasts to a single economic indicator. The worst of these models assert that a single quarter’s G.D.P. growth is sufficient; others average G.D.P. growth over several quarters, but they still put a lot of weight on very recent data. Because these computer models read the data so literally, they overreact to statistical noise. If the election were to be held next month, they would have no choice but to interpret this morning’s data as evidence of a recession, leading them to forecast a huge swing against the president’s party.

Oh, Lord, we can’t have that.  “We must protect Obama at all costs” has been the operative slogan since 2008.  Let’s all pretend that he’s a genius, playing 11 dimensional chess and his speeches are the bomb-diggity. (I just learned that phrase from number 1 child and I intend to use it all the time now).

Wolfers needs to get out more.  I meet very few people who are prospering and I meet a LOT of people these days in my part time job.  From what I can see, we are all pinching pennies.  The reason the economy is sucking is not all weather related, unless you see working people as crops that need to be periodically harvested for the last teensy bits of disposable income they have.  I swear that every industry has a meeting with some Wharton graduate giving a presentation where the numbers have been run to predict the threshold of the pain point where the consumer will be forced to fork over their hard earned dollars for gas, salad, auto insurance, health insurance, tuition, rent/mortgage.  It’s all been carefully modeled.  And each industry thinks it’s the most important one that the consumer can not live without.  We all have to have food and insurance and a place to live, amirite?  Where else are they going to go?

But income is part of a closed system these days.  It can’t be created out of nothing.  Every penny is accountable to the shareholder.  And if there is no money going into the system, it’s difficult to see how the economy continues to expand.  The contraction is real and it’s coming from the top.  The money is being hoarded or spent on the biggest yachts in the world.

The Great Recession or the Little Depression has dragged on too long but a person like Wolfers or Paul Krugman or some smart ass Democratic operative might not know it.  It’s dragged on and people are diving into the corners of their nests for a few eggs that are left, if there are any.  But this hasn’t stopped the MBAs and marketing dudes from creating new and improved ways of getting those last remaining dollars first.

So, color me unsurprised if the numbers that Wolfers finds so easily dismissible right now turn out to have real impact in November.  The economic contraction is real.  Whatever expansion was in the works may be getting strangled by the effects of the endless winter and the impact of the Obamacare individual mandate.  If you see your part time hours getting cut, you might not be quite so confident as a consumer.  Every item in a store starts to look like a moment of pain requiring a careful calculation of how many hours of work are required to buy it.

Wolfers can’t even use the R-word but I can.  It’s called a recession.  If I were a Democrat running a campaign, I’d be worried.

***********************************************************************

In addition…

Apartmenttherapy has been doing a series of posts lately on the realities of living on a strict budget.  The posts on food shopping have generated quite a bit of controversy with some readers in what sounds like the Obama contingent scolding poorer readers for not buying the best organic foodstuffs from Whole Foods.  It’s gotten ugly at times.  Even the “calming the waters” post from Cheryl Sternman Rule at The Kitchn affiliate makes a lot of assumptions that would only occur to someone at the top of Maslow’s pyramid of needs.  It’s a tragedy that we’re even having food fights like this.  Maybe Justin Wolfers should hang out in some of the blogs I visit regularly.

As for me, I have discovered Aldi, I buy bags of frozen chicken breasts at Trader Joe’s (because they are that good for that price), I am learning to avoid the “fuel perks! for food” scam at my local Giant Eagle and I am gardening this year.  Yes, yes, the weather sucked last year and all I got was squash, which I hate.  (So, I’m not planting any squash this year).  Call it the triumph of hope over experience.  I have a lot of yard and there’s no excuse for not turning it into a food manufacturing facility.  There’s a farmer’s market in East Liberty on Saturday mornings that I will visit when I can and when I’m in Target, I will look at whatever is on sale.  So there.  :-pppp

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Clap harder, CLAP HAAAARDER!!!

Typed “daily” into the Google search bar looking for the Daily Show, got DailyKos instead.  What the heck, let’s see what they have on the first page.  Oh, it’s a post by DemFromCT titled “What if the Economic News Gets Better?

{{faceplant}}

First, there’s an oh so brief blurb on the Greek sovereign debt crisis, that looks like it’s going to turn out ok anyway!  Isn’t that great??  The stock market is doing ok and the Euro bounced back, but we still hate Wall Street.  But our 401Ks are doing well, not that any Kossacks care about materialism and filthy lucre made on the backs of working people all over the world.  Dayum, do you see the slope on that curve?  It’s f%c^ing *awesome*!

But then, the post gets serious and discusses the GDP.

Right, who are we fooling?  Oh, right, these are Kossacks, who were used as a giant male fraternity party clueless focus group for the Obama campaign in 2008.  So, the bad news is that GDP was only 0.7% for the first half of the year.  The good news is that it was 2.5% in the 3rd quarter!  Isn’t that great?  That will keep those nasty wasty Republicans (boo!, hiss!  boo!) at bay next year because if this keeps up for the 4th quarter, we’ll have an average annual GDP for 2011 of …

… wait for it…

.

.

.

… it’s going to be good…

.

1.6%!!

{{cue the bad magician music}} Da-da-DA-DA-da-DA-da-DA-DA, Da-da-DA-DA-da-DA-da-DAAA!!

Uhhh, guys?  That’s not that good.  And you know what?  9.2% unemployment is a bigger number and likely to stick in the public’s mind a lot longer.  Just think about it: next year, presidential candidate’s debate, Obama gets up there and announces a sensational 1.6% GDP, pats himself on the back, because that is so Barry. Romney furrows his brow (provided he can actually move it) and says, almost sotto voce “9.2% unemployment”, shakes his head, glances at Obama, looks down at his podium, shuffles his notes, shakes his head again, sighs.

See where I’m going with this?   A GDP of 1.6% is anemic.  Check out this post from Brad Plumer at WaPo.  Here’s the money quote:

The economy grew at a 2.5 percent annualized pace in the third quarter of 2011, according to new Commerce Department data released this morning. Seeing as how plenty of economists were grumbling about a double-dip recession not too long ago, even modest growth counts as cheering news. But 2.5 percent growth won’t bring us back to full employment anytime soon. So how much growth do we actually need?

Short answer: A lot more. Back in August, the Congressional Budget Office released its revised GDP forecasts and predicted that the economy would gallop along with 3.6 percent growth between 2013 and 2016. Now, as Jeffrey Frankel has shown, government forecasters tend to err on the optimistic sign, but even in the CBO’s sunny scenario, we wouldn’t hit full employment until 2017.

It’s not enough to keep Social Security payroll taxes streaming in to keep the system going.  One year or two maybe we can make up the difference.  But four?  With another four more years of Barry at the wheel carrying on the Bush legacy and trying to make Grand Bargains with the Republicans to give away virtually all we have left?  What are you guys smoking over there?

The next part of the post is the funniest:

Sure, none of this changes the huge need for jobs or fixes the housing crisis, but with Obama pounding jobs bills and student relief (and some of it actually getting into the headlines and onto the news), it might just reverse the bad news coverage Obama has been getting this year.

It’s of special importance because the GOP really has nothing beyond economic frustration to run on. Their plan, be it this week’s flat tax, last week’s 9-9-9 or Paul Ryan’s disastrous roadmap is all the same: coddle the rich and screw the middle class. No one likes their plan, but with a tanking economy, no one is going to reward incumbents.

So what happens if a year from now, the economy isn’t tanking? Keep in mind the Republicans have no Plan B if America does well.

So, we admit that Obama has been a failure, just as we Conflucians predicted him to be back in 2008, given that he was an inexperienced, political unknown who seemed to flinch whenever anyone called him a Democrat and was being funded by Wall Street in vast quantities (We HATE Wall Street! Remember? But look at my 401K!!).  And we admit that he clusterf^&*ed the housing foreclosure crisis and the unemployment crisis and sure, it looks bad.  But that’s just because Obama keeps getting bad news coverage.  If he gets *good* news coverage, we unemployed people who can’t pay our mortgages will just let bygones be bygones.

And what’s this about the GOP plan to “coddle the rich and screw the middle class”?  I thought that was Obama and the Congress’s plan.  Isn’t it?  Because that’s what it looks like to me.  If Obama and the Democrats have the same plan as Romney and the Republicans, how are we supposed to tell them apart?  Better yet, why should I vote for either of them?  There are other options on the ballot and, who knows, by this time next year, there may be a third viable candidate.  The Occupy movement has unveiled a deep dissatisfaction with both parties.

What is Obama’s Plan B anyway?  I mean, if he wins re-election in 2012, he doesn’t have to have one, you nitwits.  Which is why you shouldn’t be giving him a pass.  You should be on his case and vowing not to vote for him unless he does something for you *before* the election.  Unless all you care about is your 401K.  (Didja see the slope on that graph??)  Even Steve Jobs told Obama that his poor performance on the economy was going to cost him the White House in 2012.  True story.  It’s in Jobs’ new biography by Walter Isaacson.  And we know that Jobs was pretty damn good at getting a feel for what people want.  (Have you checked the quarterly earnings for Apple these days??  Amazing!  Oh, but we HATE Wall Street)

Look, you Kossacks screwed up good in 2008 and as a result, the pain and misery for millions of Americans is going to continue for a long, long time if either Romney OR Obama wins next year. Yes, YOU, You are responsible. The best thing you can do is stop trying so hard to make this sound better than it is.  Stop lying to yourselves and each other.  If you want to make this better, tell Obama to step down now and let someone else with longer coattails take on the Republicans.  Even you guys can’t possibly be as delusional as DemFromCT’s post.

By the way, he could have stopped what happened in Oakland on Tuesday night if he really cared about citizens and their first amendment rights.  There’s an Iraq War veteran who is now in the hospital in critical condition because of this out of control overreaction by “riot police”, if that’s what we’re calling them these days.

I don’t know what is worse, that they knocked this poor guy out and seriously injured him or that they tried to prevent other people from helping him.  I haven’t been so disgusted with the behavior of police in a long time.  This is outrageous.

**************************

In a bit of good news, apparently, Elizabeth Warren’s embrace of the Occupy Movement hasn’t dampened the enthusiasm of the people of Massachusetts who want to work for her senate campaign.  This is a picture of the people who volunteered on Tuesday to lend her campaign a hand.

Golly!  Can we clone her??

Pass the debt ceiling without conditions

So, I hear that Obama wants us to ‘Tweet!’ to our Congress and tell them to compromise.

Screw that.  Have you seen the latest details on the sputtering economy?  GDP was something like 1.3% in the last quarter.  That’s atrocious.  And don’t think that Americans don’t notice.  They knew long before the stats came out that the economy is bad, worse than they’ve ever known it.

So, why the hell should we be calling and tweeting our congresspersons to compromise on one of the bills that will drastically cut spending to such an extent that economic recovery will be extremely difficult?  That makes absolutely no sense.  If anything, we should be tweeting our congress to pass the debt ceiling without any conditions at all and scrap whatever harsh and brutally cruel austerity measure it was contemplating.

Congress needs to go back to the blackboard and craft a new stimulus package.  Republicans and Tea Party lunatics need to get off of the social safety net slash viagra and get in touch with their human side, assuming they have one.  I’ve read that Tea Party activists have complained that the $17 billion in Pell Grants in the budget bills were “welfare”.  Let me just say that after all of the years that I sent enough money to Washington in taxes to support a family of four, I do not want to hear from the jerks who think that a Pell grant is “welfare”.  We’re unemployed professionals.  If you don’t want us sucking off the government, you’d better get the economy back on its feet.

And stay the f%^* out of New Jersey.

Anyway, Merck is laying off something like 12,000 people and 30-40% of those workers are coming out of the United States’ research sites.  I have friends and former colleagues who work at Merck who are worried that they’re next.  They’re not deadbeats.  They’re well educated professionals with more brains in their pinkies than some assholes in Congress have in their entire heads.  This is not fair to them or the hundreds of thousands of future patients who will not get the treatment they need because there won’t be new drugs on the market.

I’m sick of the crap the Republican House is pulling.  I’m enraged by the hostage crisis.  And Obama is the WORST president of my lifetime if he thinks he can capitulate to these maniacs and get away with it.

Screw compromise.  Pass the damn debt ceiling and get back to work.

Don’t make me come down there.