Obama's Incredible Shrinking Economy

Obama's Incredible Shrinking Economy

By Dan Joppich

 

From MSNBC.com, of all places: "Ouch: U.S. Economy Shrunk Almost 3 Percent"

Highlights include:

• Gross domestic product fell by 2.9 percent, the worst performance in five years.
• There hasn't been a larger difference between the second and third revised estimates in 38 years.
• The magnitude of the revisions suggest other factors at play beyond the weather.
• The latest revisions reflect a weaker pace of healthcare spending than previously assumed.
• Trade was also a bigger drag on the economy than previously thought.

This is a very different story from what we’re used to hearing from our friends on the left.  It’s particularly amazing that MSNBC is finally recognizing that the increase in health care costs, thanks to ObamaCare, may be a factor, since up until now, the president’s signature progressive program has been sacrosanct.  But let’s not ignore other drains on the economy like Obama’s sequestration and the massive tax increases due to the ACA that resulted in fewer refunds in the first quarter.

So just how bad is a 2.9% drop?  It’s not just the worst performance in five years; it’s the fourth-worst quarter in the last thirty!

Leading the way, personal consumption dropped from 3.1% in the second estimate to a dismal 1% in the most recent revision.  No surprise.  People spent their money on taxes and higher health insurance premiums instead of televisions and cars.
What does this spell for the rest of the year?  The economy has to grow by an average of 4.3% in each of the remaining three quarters just to reach a pathetic growth of 2.5% for the year.  Obama’s “recovery” has reached that level only once.  If the average growth for the remaining three quarters is 3.0%, 2014 will finish with slightly more than 1.5% annual growth.
How bad is 1.5%?  It would rank as the fifth-worst annual growth in the last thirty years!
But what are the odds that we’ll see a 5.9% rebound between the first and second quarters?  Not likely if you consider this report:

Orders for long-lasting U.S. manufactured goods unexpectedly fell in May, suggesting an anticipated rebound in growth this quarter could fall short of expectations, even as a measure of business capital spending plans rose.
The Commerce Department said on Wednesday durable goods orders declined 1.0 percent as demand for transportation, machinery, computers and electronic products, electrical equipment, appliances and components, and defense capital goods fell.

I don’t remember a lot of major snowstorms in May.
Combine the durable goods issue with the millions of people who signed up for ObamaCare in March and April who didn’t make their first insurance payment until the second quarter.  Add to that all those people and businesses who had to write checks on April 15 – not just for 2013 taxes due, but for first quarter estimates, too.  Let’s not forget about the second-quarter 2014 estimates due on June 15.  Icing on the impending recession cake are reductions in defense spending, skyrocketing gasoline and energy prices, and massive increases in the cost of food.
Not much left over for a new refrigerator or Xbox.
This all adds up to another really bad second-quarter GDP report, to be released just as Democrats go home for summer break and begin campaigning.
As our liberal Obama-worshipers at MSNBC said, “[t]he magnitude of the revisions suggest other factors at play.”  What other factors could they be talking about?
Could this be the administration’s way of yelling "squirrel" to draw the media’s attention away from Iraq, the IRS scandal, and the VA?  It’s a pattern developed over the last five years that can’t be ignored.
Personally, I think Obama’s operatives know that this isn’t the end of the bad economic news, and the latest first quarter figures were intentionally revised downward to absorb some of the impending second-quarter doom.
The definition of a recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
I firmly believe that Obama is accelerating the bad news into the first quarter, because the writing was on the wall for a second-quarter GDP, and it was spelled out in negative digits.  Better to have Q1 at -2.9% and Q2 at +1.0% than Q1 at -1.0 and Q2 at -0.9%.
It wouldn’t be the first time.  Remember how, in true Chicago-style political fashion, the unemployment figures were conveniently fudged right before the 2012 election, showing a better than expected drop, and then right after Obama won, they said, Oops we missed something!  Here are the corrected figures.
Obama and the Democrats could not survive being labeled with the R-word right before the kickoff of campaign season.
Here are some more stats you won’t find reported by the liberal lamestream media: this was the 17^th-worst quarter (out of 267 quarters) since just after WWII, when they began quarterly reporting, and the worst ever during a non-recession quarter.  Over the last two years, annual growth has averaged only 1.4%.  Obama’s “recovery” since the end of the recession has averaged 2.1% – Reagan at the same point was averaging 4.8% quarterly growth.
So along with Obama’s shrinking approval ratings, we can add his incredibly shrinking economy.