RSSBack To Hooverville for First Quarter GDP
GDP up 3.5 percent in the first quarter of 2005.
The country’s economic performance in the opening quarter of 2005 was better than first thought, logging a solid 3.5 percent annual growth rate in a new sign of a strong springtime business expansion.
The latest reading on gross domestic product, released by the Commerce Department on Thursday, was an upgrade from the 3.1 percent pace initially estimated for the January-to-March quarter.
The higher estimate for economic growth mostly reflected a slight improvement in the nation’s trade deficit, which was less of a drag on growth than the government previously thought. More brisk spending on housing projects also helped.
However, it appears that the media saw fit to rain on this good economic news by placing on the head line the negative statement, “Jobless Claims Rise”, as if it was a comparable. When we get way into the story we find the following:
In other economic news Thursday, the Labor Department said new claims for unemployment insurance rose by 1,000 to a seasonally adjusted 323,000 last week. Even with the increase, the level of claims still points to an improving job market, analysts said.
They are going to compare a 3.5% GDP for a quarter with 1000 unemployment claims? Even the negative economic news that is inferred by the headline, is really not negative after all. Go figure. To bad this information was not left for that last paragraph of page 2.
The trade deficit didn’t weigh as much on economic growth in the first quarter as previously estimated. The deficit shaved nearly 0.7 percentage point off GDP in the first quarter, compared with an initially estimated 1.49 percentage-points reduction.
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This bothers me more than any other form of political spin because economic choices and economic vitatlity is largely based on perception. One of the best movie quotes ever to put this into perspective came from the 1992 movie “Sneakers”:
Cosmo: Posit: People think a bank might be financially shaky.
Martin Bishop: Consequence: People start to withdraw their money.
Cosmo: Result: Pretty soon it is financially shaky.
Martin Bishop: Conclusion: You can make banks fail.
Cosmo: Bzzt. I’ve already done that. Maybe you’ve heard about a few? Think bigger.
Martin Bishop: Stock market?
Cosmo: Yes.
Martin Bishop: Currency market?
Cosmo: Yes.
Martin Bishop: Commodities market?
Cosmo: Yes.
Martin Bishop: Small countries?
So true Tomahawk, and they are also trying to take down the housing markets with the “bubble scare”….. just criminal!