It’s become clear that higher fuel and food prices are having an effect on the economy. However to many sycophants in the media, the Obama Boomis indestructible. This article dismisses all the facts about our economy and instead gets out the pom poms!
Outside of some relatively unimportant housing data and continued downward adjustments to first-quarter real GDP growth forecasts, the market’s main focus this week was on corporate earnings, which were generally positive and well received by the markets.
[….]
All of that said, I am not any more worried about the economy than I was a month or two ago. While there are many things to be concerned about–especially inflation–I don’t really think the first quarter was weak compared with the fourth, as the GDP forecasts suggest. I suspect, however, that next week’s GDP headlines won’t be nearly as conciliatory. I have picked out some key statistics that suggest to me the economy is not nearly as weak as the 1.5% potential growth rate would suggest.
A combination of a strong start to the fourth quarter and a weak start to the first quarter may explain part of the issue. A quarter that starts off on a down note, as it did in January, makes it hard to have a decent quarterly number even if the remaining two months of the quarter were “normal.” Certainly accelerating inflation also wrecked havoc on the numerical calculations. Higher employment, production, and manufacturing statistics (that are generally based on units not dollars) cited above seem to indicate a strong if not accelerating economy. However, the normal GDP calculation that subtracts inflation from the growth in nominal dollars might not have captured all the real growth in the economy during the first quarter. How could the economy show almost no real growth if stingy U.S. employers added 478,000 jobs in the quarter? Just as the economy was probably weaker than portrayed by the official government statistics mills in early 2009, I suspect the “real” economy is doing better than what will be captured in next week’s GDP report. A relatively strong quarterly earnings season would also seem to support my view that the economy is doing better than current first-quarter forecasts suggest.
That’s right! Don’t believe the weak numbers. The economy is booming as never before. Not even higher oil prices can stop the Obama Boom! If a Republican was president, would you even see an article like this one? We all know the answer!
