As it has been quite presciently and concisely reported for awhile now (per
recent commentary from Calculated Risk), and--very regrettably--as anticipated by many others, too, the combined trajectories of many of our economy's most important quantitative realities are rapidly plummeting, and at the very worst possible moment for Democrats during this mid-term season. Today, we will learn of the (actual) sad state of last quarter's gross domestic product, when we're (much more than likely to be) informed of a major downward revision of same.
A story filed via the AP, a little over two hours ago, confirms more (of what we've been hearing and reading for months, and) of what's immediately ahead in the economic news cycle, as early as this coming morning: "Snapshot of Economy About to Get a Lot Bleaker."
Snapshot of Economy About to Get a Lot Bleaker
By THE ASSOCIATED PRESS
NY Times.com
August 27, 2010
Filed at 12:09 a.m. ET
WASHINGTON (AP) -- The government is about to confirm what many people have felt for some time: The economy barely has a pulse.
The Commerce Department on Friday will revise its estimate for economic growth in the April-to-June period and Wall Street economists forecast it will be cut almost in half, to a 1.4 percent annual rate from 2.4 percent.
That's a sharp slowdown from the first quarter, when the economy grew at a 3.7 percent annual rate, and economists say it's a taste of the weakness to come. The current quarter isn't expected to be much better, with many economists forecasting growth of only 1.7 percent.
Such slow growth won't feel much like an economic recovery and won't lead to much hiring. The unemployment rate, now at 9.5 percent, could even rise by the end of the year...
[Diarist's Note: It's quite mind-boggling to this diarist that some folks here could accuse others of "cherry-picking the news," when these are not just the business ledes of the moment, but the overall news ledes of the day, as well. Then again, this all reminds me of the stereotypical childhood warnings, in terms of having enough common sense not to walk off of a cliff just because someone else tells you to do that. Perhaps other Democrats might relish the concept of being a dutiful lemming, but frankly, this diarist refuses to go quietly. So, while some here may prefer the lies (or, they just wish to avoid the truth, in general) versus what actually lies ahead...such as the very likely onslaught Democrats, and those managing the economy in general, will face in just the next few hours...this diarist prefers it straight-up.]
Calculated Risk: Economic News Is About To Get Worse
by bobswern
Daily Kos
Sun Aug 15, 2010 at 07:18:20 AM EDT
Highly-respected economic pundit Bill McBride, the Publisher of Calculated Risk, served up a triple-whammy of inconvenient realities over at his blog on Saturday. The usually even-handed and normally optimistic McBride tells us, as far as the economy's concerned, we're in for a very "Negative News Flow" in coming weeks. Obviously, this is more bad news for Democrats. And, as far as the DKos community's concerned, this means the cacaphony of cognitive dissonance will grow even louder, the closer we get to Election Day.
Intro
McBride points out:
HOUSING...
--on August 23rd, the existing home sales report will verify that sales "collapsed" in July, and we're told that's virtually inevitable since it's already being demonstrated in the regional reports for the period;
--existing months-of-supply (i.e.: inventory of homes on the market) will traverse into double-digits, which will all but verify that we are yet to reach a bottom in the residential real estate marketplace;
--in hand with the two realities, noted immediately above, "house prices are probably falling again," but due to a lag in the release of this data we may not be made aware of this until as late as sometime in October.
GROSS DOMESTIC PRODUCT (GDP)...
--the second (first-revision) estimate of Q2 2010 GDP will be released on August 27th;
This will probably show a significant downward revision from the preliminary estimate of 2.4% annualized growth. The downward revision is due to lower construction spending than the BEA initially estimated, less contribution from inventory adjustments, and the June surge in exports.
And, as I noted it in my post on Thursday, and earlier in the month, on August 4th, the likelihood of Q2 2010 GDP being cut in half, or worse, to below 1%, bodes quite ominously for the next few months' numbers on our economy, in general...
And, here we are...on August 27th, with the first-revision of our country's most recent quarterly Gross Domestic Product (GDP) report just hours ahead; and it will most certainly be bad. Perhaps quite god-awful. And, then there's a jobs report--which is also anticipated by many to be quite negative--scheduled to be released next Friday, just as we enter into...the Labor Day weekend.
# # #
And, on that note, today, Paul Krugman is talking directly to many in this community (whether they're going to acknowledge it, or not) about these harsh realities, as well. IMHO, we should listen to him! And, as responsible Democrats that care about the future of our party, we should act, accordingly.
Krugman, in today's NY Times: "This Is Not a Recovery."
This Is Not a Recovery
By PAUL KRUGMAN
NY Times
August 27, 2010
...this isn't a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact...
Krugman points out, today, that we're not in a classic recession.
The small sliver of truth in claims of continuing recovery is the fact that G.D.P. is still rising: we're not in a classic recession, in which everything goes down. But so what?
The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down. Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead. Will the economy actually enter a double dip, with G.D.P. shrinking? Who cares? If unemployment rises for the rest of this year, which seems likely, it won't matter whether the G.D.P. numbers are slightly positive or slightly negative.
All of this is obvious. Yet policy makers are in denial.
Krugman then notes the action items...
"THE FED has a number of options..."
- buy more long-term and private debt
- reduce long-term interest rates by publicly stating it intends to keep short-term rates low
- raise the medium-term inflation target, if for no other reason than to encourage businesses not to sit on their cash
THE ADMINISTRATION "...has less freedom of action...But, it still has options..."
- revamp previously unsuccessful attempts to aid homeowners
- use Fannie Mae and Freddie Mac to create mortgage refinancing programs that actually provide cash to strapped homeowners
- confront China as far as that country's currency manipulation is concerned
The Nobel Prize-winner said that if he had any say in the matter, we'd do all of this, concurrently.
...we've already seen the consequences of playing it safe, and waiting for recovery to happen all by itself: it's landed us in what looks increasingly like a permanent state of stagnation and high unemployment. It's time to admit that what we have now isn't a recovery, and do whatever we can to change that situation.
# # #
Brace for impact, Democrats...and then STAND-UP, BRUSH IT OFF and MOVE FORWARD and deal with reality, dammit! Or, be a lemming and walk right off that cliff...just like the GOP'ers want us to...
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