The Economy is Growing. Right. And I Don’t Have a French Accent.
by Veronique de RugyWe should be happy. The Bureau of Labor Statistics announced a 3.5 percent growth in this year 3rd quarter. Yet, most of us aren’t. At least I know I am not. Why? Because I have no faith in the numbers.
First, the Gross Domestic Product (GDP) numbers include government spending. So, when the government pumps thousands of billions of dollars into the economy it will look as if GDP is growing.
What’s more, the way the GDP accounts for government spending is totally biased: It assumes that if the government is spending $200,000 on a contractor to repave a road in the middle of nowhere that it will create $200,000 of genuine economic value. By contrast, GDP measures are tougher on private-sector spending. As my George Mason university colleague Garett Jones explained to me recently “So if Exxon Mobil pays an engineer $200,000 per year, that only shows up in GDP if the engineer finds an extra $200,000 of oil to sell, or builds a new machine that sells for $200,000, something like that. So our GDP measures of “government spending” are awful–and when the government is in a race to spend money as quickly as possible, these measures are going to be even worse than usual.”
This is an very important point. Especially when we think of this particular data. First, the current dollar GDP increased $150.3 billion in the third quarter. In the same time period, the government injected about $174 billion dollars into the economy in the form of personal tax cuts, unemployment assistance, student aid and nutritional assistance, and grants. In other words, the amount of cash the government injected in the economy exceeds the current GDP increase.
Another point: the GDP doesn’t capture any changes in personal stock benefits. This is key because high ranking executive are getting the majority of their compensation from that. That’s got to be looking pretty bad right now. But the GDP doesn’t capture that.
GDP also doesn’t capture Research and Development spending. The cuts in this area were large and unaccounted for. Also not included in the GDP figure: Pension benefits and the flow of funds accounts of the United States Balance sheet information from the Federal Reserve Board.
This is some of what’s wrong with the numbers. And that’s why I would rather find a bar to drown my sorrows than to celebrate right now.
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31 Comments
There is no growth. No new jobs. No saved jobs.
"Every dollar being spent from Recovery Act is helping put someone back to work," said Vice President Joe Biden. "My message today is that we're on track."
OOOOH YEAH!!!! KNOCK EM' DOWN, BIDEN!
Once all the money from the spending spree from the government is gone, the economy will enter it's bottom state and recovery on it's own. Government does need to remember: Recessions are normal. They happen and will always happen. The economy NEEDS recessions to get rid of stupid people.
It is all done with smoke and mirrors (Joe Wilson would say "it's a lie" and he would be right)
WTF, can't you read? Refer to the second comment… Biden has the situation under control, so relax.
[...] This post was mentioned on Twitter by Big Government, Big Government. Big Government said: The Economy is Growing. Right. And I Don’t Have a French Accent.: We should be happy. The Bureau of Labor Stati.. http://bit.ly/nc0VJ [...]
hey stupid redneck (that is your name right?) shouting profanity is really not cool, go do that on your liberal sites. Obama owns a lot of them, he spent $9000 on purchasing propaganda sites, you should have no problem finding them.
Grizzly Adams DID have a beard.
[...] Read the whole thing and cry. Then read it again, and cry, cry again. [...]
I predict a housing boom around DC, away from the "chronically economically distressed" areas of course. They have to house all those new bureaucrats somewhere.
For the rest of us, I predict the internet search engines will get many hits for recipes on how to stretch out a large can of dog food with three packs of ramen noodles to get two meals for a family of four.
And you can stop sending in money to the SPCA and the animal shelters, that pesky "pet overpopulation" problem will soon be taken care of.
Wake up and smell the coffee y'all. What you have always suspected is the actuality. There's a limit to everything. Yes, even American prosperity. Especially given we have ripped the guts out of our manufacturing segment and continue to pour a river of money into Arabia for oil.
We have reached the end of the rope. All we can do is tie a knot and try to hang on. We're going nowhere. Except maybe to a WW III sort of conflagration. That's our normal 'clear-the-deck-and-start-over' practice. Prepare to send your children off to die for you.
We have no one to blame but ourselves. Not the rats nor the pubbies. We did this to ourselves. Heck we could put Ron Paul in as president tomorrow and give him a conservative congress … and he couldn't turn this ship away from the iceberg. Its far far too late. We wouldn't stand for it anyway. He'd be lynched.
Waste not want not they say. Well we have wasted it all.
Folks, we have a winner for "funniest sarcastic comment" for today!
When it comes to numbers, remember two things: Figures lie, and liars figure.
Trust the government? We can't trust them to release a set of elementary numbers, how could we trust them with health care?
kadaka
The first 4/5 blocks of DC housing (coming in from east Rt. 50) have been beat-up run-down row houses for over 20 years.
I recently had reason to drive through after not doing so for about 2yrs. It was amusing. What has been an eyesore and an enclave of housing for the poor, it is now getting a face lift. In the past, one or two houses would be purchased and rehabbed, they stood out in bold relief. Now whole blocks are being upgraded. My interpretation of this is– that it is not being done to improve the housing for the former residents, but for the new expanded government employees. The stretch from the Arboretum inward is undergoing a real face lift starting with the homes.
There are also a number of middle high/ high cost apartment /condo housing units going up around the Capitol building.
I predict that there will be a large number of displaced welfare recipients in the newly desirable areas of DC.
–Perhaps when the large number of people are squeezed out of their former neighborhoods they may begin to see the writing on the wall–telling them just how 'important' they are to this administration.
"I predict a housing boom around DC, away from the "chronically economically distressed" areas of course. They have to house all those new bureaucrats somewhere."
Comrade, I've got a beautiful house on a wooded third-acre inside the beltway that I would love to get rid of, and I can tell you: if this housing boom is happening, it ain't happening this year. Don't think that because government makes wealth disappear from the citizens that it can make wealth appear for itself.
Isn't there a contradiction here:
"It assumes that if the government is spending $200,000 on a contractor to repave a road in the middle of nowhere that it will create $200,000 of genuine economic value…
"First, the current dollar GDP increased $150.3 billion in the third quarter. In the same time period, the government injected about $174 billion dollars into the economy in the form of personal tax cuts, unemployment assistance, student aid and nutritional assistance, and grants."
If the govt injected $174 billion, and its GDP measure assumed every dollar created 100 percent value, then the GDP measure would have risen by $174 billion, right?
Obamanoics- read from teleprompter words people put in my mouth, the govt. is an economy, now lets play basketball
and that loud whooshing sound is the sarcasm being taken altogether too seriously.
Even if it should be obvious to anyone with half a brain, always remember sarc tags…
I am truly amazed that the WH would try to spin the GDP figures as economic growth in light of the fact that FOX NEWS would destroy their premise in a nanosecond. How continually stupid can these neophytes be ? This is becoming a comedy show.
Put down the KOOL-Aid; it's completely rotted you brain.
Biden doesn't even have control of his mouth; let alone our economy. Oh and FYI………..our economy is NOT part of any VEEP's job description and Joe hasn't done anything whatsoever to help it anyway.
The point is that according to the WH, the recession that Obama inherited from Bush is over. Great glad to hear it. Of course, from here on out, any future problems are all Obama's
Soon obama will be showing us his Potemkin village with all the smiling laboring serfs.
Approx 3 million jobs lost since obama has been in office and this economic illiterate gloats about 30,000 jobs the stimulus created. It's like a guy who's $10 million in the hole, wins $10,000 gambling and thinks he's rich.
Throw the sniveling leftwing children out in 2010; then throw the socialist bum in the White House out in 2012 if he's not impeached before then.
What Ms De Rugy is showing is that ObiWon (PBUH) is now faking the numbers in the same way the Soviets, Maoists and others did their 5 year plans/results. These phony numbers then became the basis for even worse socialist fiascos because the various politburo self-interest groups demanded the crap be used as the basis for decisionmaking. We are going socialist while they go capitalist; we must insist on competent number crunching, or we will wreck ourselves.
[...] Read the whole thing and cry. Then read it again, and cry, cry again. [...]
Thanks Ms. De Rugy for the Free Market analysis. More Misean economics @ BG is great! The new 5 year plan….fudge the GDP numbers and glorify our wonderful Leader.
I think you might be taking the hysteria rehetoric churned out by the current administration a little to seriously. This society is still viable without committing to WWIII. All it needs is to cut taxation, cut government growth, and let the economic engine pick up some RPMs again. Unfortunately, your gloomy outlook is a possibility given the federal government's current unrestrained debt spending, preoccupation with imaginary issues instead of focusing on real ones, and the agenda to shut down capitalism and confiscate personal wealth.
Not if the GDP contribution from other sources was net negative.
I think the WH is counting on a certain segment of the population accepting any positive sounding statement as gospel if it comes from an authoritative-sounding source speaking officially for the President, in whom many have invested blind confidence. I don't know how many of those are left, but it seems the number should be dwindling.
It seems that you Can NOT believe ANY govt Report!
[...] From BigGovernment.com [...]
Wake Up America! Their lying once again! Of course they lie everytime they open their mouths. i can't wait for soemone who is plain talkin, a true striaght shooter to come on the national political scene. i am so tired of the &**^%$#%$^%%& in Washington who try to invent a new langauge every week to justify their bad performance and theri refusal to do as the public deserves. They must think we are too stupid to see that they can call a bright yellow flower black but it is still yellow. The economy isn't turning around it's getting worse and Obamas stimulas bill has failed beyond belief. In fact if it is allowed to play out it will ruin the country and the lives of your children and their children and their children and so on and so on. Reagan was right and history proved it, Cut taxes and government spending then get the hell out of the way. Stop the corruption and the double talk from the idiots. wake Up America! do it Now! go to Washington on thusday November 8th at noon at the Capital and let these *&*^&%^*& know we mean business now!