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When Is 3.5 Truly 2.2?

Posted by Larry Doyle on December 22, 2009 9:19 AM |

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.

LD

  • divvytrader

    yup …… nary a word on CNBC today on this huge final GDP number ….. they all to busy jabbering away how UST rates are soaring due to expectations of such a huge economic recovery in 2010 …. as if higher interest rates are now GREAT for the economy and not a single commentator connecting the dots to higher rates having any connection to the ever higher record sized UST auctions and ther inevitable end of buying FNM/FRE debt …… yup , in the new bubble economy , stocks and interest rates soar higher together ….. and Bernanke and Geithner wonder why we want a full audit of the Fed holdings ?

  • divvytrader

    actually ? even that 2.2% number wayyyy overstates true GDP number when you consider 70% of that growth was just cash for clunkers ( http://www.businessinsider.com/70-of-the-gdp-growth-was-cash-for-clunkers-2009-12 )

  • Larry Doyle

    Smoke and mirrors…shake and jive…extend and pretend…fool some of the people…Not exactly an honest assessment of all that is going on or not going on in the good ol’ US of A.

    Thanks for that link.

  • Mike

    Everyone is getting into more credit card debt this Christmas. Better than having to cancel the holiday right?






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