Thursday, September 27, 2012
There were a number of highly disturbing signs on the economy today. It is simply appalling that the Obama Media is largely embargoing the story.
For starters, America's gross domestic product (GDP), the market value of all officially recognized goods and services produced during this last quarter shrunk and plummeted into the red zone. Originally predicted to grow by an already anemic 1.7%, the GDP's actualpercentage of growth has been revised down to 1.3%, which means the economy as a whole is actually shrinking.
Another sign of this is that durable goods orders fell by 13.2 percent, the largest drop since January 2009, when the economy was in the throes of a recession.People aren't buying. To translate that into street terms, with a lot less orders, inventories are up and those 'no help wanted signs' are going to stay up.
Economist James Pethokoukis calls this a 'red zone' :
U.S. economic growth is dangerously slow. I’ve frequently written about research from the Fed which finds that since 1947, when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.
And he's by no means alone in seeing the danger signs.
Citigroup has also taken a shot at determining the stall speed: “Specifically, when U.S. growth has cut below 1½ percent on a rolling four-quarter basis, it has tended to fall by nearly 3 percentage points over the following four quarters, and the economy has typically entered recession.
CNBC's Rick Santinelli sees it the same way:
Actually, these aren't new trends. They're just showing the inherent weakness in the economy that's already there.
If Barack Obama is reelected, the sticker shock of new taxes and the price tag on ObamaCare, higher energy prices and this president's other initiatives (including the eventual blowback from digitizing money to purchase debt known as quantitative easing) iare going to send large sectors of the private economy into collapse. A lot of those collapsed businesses won't be bailed out, because the money won't be available. Instead, they'll be bought up and eaten by larger fish well connected to the Obama Administration, which has already shown a disturbing predilection for crony capitalism.
The way to grow GDP, of course, is to cut taxes and free up capital for purchases, R &D, new hiring and investment, all of which create economic activity and actually increase revenues when they're taxed.
But that is most definitely not on this president's agenda.
It will be interesting to see whom a re-elected Presdent Obama blames this as if it happens.And it will be even more interesting to see how the recipients of 'free' phones and 'Obama money' react whenit isn't forthcoming anymore.
Posted by Rob at 8:46 PM