Monday, I published a post that was complete an utter sarcasm poking fun at consensus building as a means of science. I was making fun of the “climate change” crowd, but using The Council of Economic Advisors as example of how consensus actually works in the real world surrounding GDP. Here is the what I said:
For a point of reference first quarter GDP was announced at 1% to the positive, then quietly revised downward to -2.9%.
If the consensus of The Council of Economic Advisors misses Q2 GDP by as much as they did Q1, but in the opposite direction it would result in a growth rate of 7.0%.
Well what was simply a joke has come to be a truth, just today Q2 GDP numbers were released……well let’s just say if you buy the first attempt, you probably think Al Gore is a modern day prophet.
- “The U.S. economy rebounded sharply in the second quarter as consumers stepped up spending and businesses restocked, putting it on course to close out the year on solid footing. Gross domestic product expanded at a 4.0 percent annual rate after shrinking at a revised 2.1 percent pace in the first quarter, the Commerce Department said on Wednesday…”
- Here is the gem of the entire release…“The economy came back and even though there may have been a little extra inventory building … solid activity was so widespread that you cannot call this number an aberration,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania
Let’s put all of this silliness in prospective…..
- They expect you to believe that the “Polar Vortex” was so devastating on first quarter GDP that in the second quarter, the US economy made a 7 point or 700% rebound on growth for an annualized rate of 4% over the first quarter loss of -2.9% or which ever revision you like best.
- The key is the line “….even though there may have been a little extra inventory building…..” In English, the economy really sucked eggs in the second quarter, but companies are running so thin and down to their most skilled workers they went ahead with production adding to inventories for future sales.
- So in short: Nobody really bought anything more just simply returned to normal or worse, but companies made a whole bunch of crap hoping that the economy will change and they will be able to sell all the crap they just made.
A recession is defined as two consecutive negative quarters of economic growth. The Obama administration would suffer their second recession since taking office, but this one would come on the heals of Stimulus, TARP, QE1,2…, Zero Interest Rates, etc. etc.. In other words, all the polices Berry said would keep what GW Bush did from ever happening again, yet happening again in barely 4 years.
Herbert Hoover is often blamed for causing The Great Depression and FDR is credited for solving it. Neither are true, but truth matters little in a world governed by perception not fact.
Ever since those chapters of history have been written, the political class has enacted destructive policies both monetarily and fiscally in order to “kick the can down the road” not because they think it is in the best interest of the country or her citizens, but because no one and I mean NO ONE wants to be saddled with the yoke of being the next Herbert Hoover.
It appears that what is good for climate science, a consensus where facts and results are all moving targets of the consensus has made its way over to economic data as well from GDP, unemployment rates, inflation, consumer price index on-and-on..
All motivated by the ghost of Herbert Hoover