The economy is a lot worse than the media and Obama is telling you.

[Soul Crusher]

Dial 911 if this story makes your eyes bleed
By JOHN CRUDELE

Last Updated: 12:34 AM, January 31, 2012




Posted: 11:45 PM, January 30, 2012

The economy did horribly in the last three months of 2011.

I know that’s not what you’ve been hearing.

During this past Christmas season you were first told that consumers were dying to get to the malls and shop. That turned out to be true — for a couple of days at least, while stores were desperately discounting everything they had.

Then you were told that manufacturers were having a bang-up month and that automakers were selling cars like it was the old days.

And Apple — who could forget Apple? — was selling iAnythings like they were some sort of lifesaving device and every American was in the hospital emergency room.

Last Friday the Commerce Department released its tally of business conditions in October, November and December. And it was, well, quite disappointing if you actually know what to look at.

The headline number you saw on the evening news that night and in the newspapers on Saturday was this: the nation’s gross domestic product rose at a 2.8 percent annual rate in the 2011 fourth quarter, which was better than the 1.8 percent growth in the July-September period.

In the first place, 2.8 percent isn’t a good rate of growth for any year.

Take out your calculator, divide 2.8 percent by the four quarters of the year, and you’ll see that fourth-quarter growth — even if you take these numbers at face value — was just 0.7 percent.

Tepid. Lukewarm. Disappointing. Not what should be happening four years into a recession (oh, right, that’s supposed to be over) after the Federal Reserve has used all its tricks and our elected officials have bankrupted the country.

But it gets worse.

(If you start coughing up blood while reading this column I suggest you dial 911. Remember, I’m just the skeptical messenger trying to set things straight, so don’t take it out on me.)

And that meager 2.8 percent annual growth really isn’t what it seems to be.

That’s because 75 percent of that 2.8 percent growth involved businesses restocking inventories. Who says? The Department’s Bureau of Economic Analysis, which released this data.

So people like you and me weren’t really buying all that stuff in the last months of 2011. It was businesses buying stuff and putting it on their shelves in hopes that people would soon come along and buy it from them.

Inventories will only build up so much before companies say “no more.” So these restockings are not considered a particularly good thing when the ultimate buyer — the consumer — is still uncooperative.

But that wasn’t the only scary thing in the GDP report. In fact, it wasn’t even the most important thing.

In order to get to that 2.8 percent growth the Commerce Department used a very unrealistic level of inflation in its calculations.

Let me explain: The government comes up with a figure on how much it thinks the economy grew, or shrunk. Friday’s figure was a first estimate for the fourth quarter, so most of the numbers used in the calculation are only guesstimates anyway. (But that’s for a different story.)

The government then takes that growth figure, subtracts the rate of inflation and comes up with the real growth it reports in its press release.

So, in other words, if inflation is rising it reduces the rate of actual, after inflation, growth — which is the figure that Washington reports.

In Friday’s number the government used 0.4 percent as the rate of inflation. Zero. Point. Four. Percent.

In which country is inflation that low? Certainly not in America. Absolutely not in the last four months of 2011.

The consumer price index, which is put out by the US Census Bureau, had prices up 3 percent for the year.

And the rate of inflation used in calculating the third-quarter 2011 GDP was 2.6 percent; in the first and second quarters, combined, the rate was 2.5 percent; it was 1.9 percent in the fourth quarter of 2010.

So how does the Zero-Point-Four-Freakin’ percent sound now?

That’s how Commerce got to the not-very-inspiring 2.8 percent growth it reported last Friday.

Let me put this another way in case you are missing my outrage.

If the inflation figure used in last Friday’s GDP figure had just remained the same as the 2.6 percent rate from the third quarter, Washington would have had to report fourth-quarter annualized growth of just 0.6 percent.

(Calculation: Inflation was lowered by 2.2 percentage points. So subtract 2.2 percent from the 2.8 percent growth to get 0.6 percent.)

And that’s an annualized rate. So divide the 0.6 percent by four quarters and the economy expanded at an itsy-bitsy, teeny-weeny 0.15 percent in the fourth quarter.

On Friday, the Labor Department will issue its employment report for January.

Wall Street had better get out the Depends.

john.crudele@nypost.com



Read more:

http://www.nypost.com/p/news/business/dial_if_this_story_makes_your_eyes_mUsVVoUaMuMRt4AK2DlXxJ#ixzz1l2gYbc5Q

[Soul Crusher]

http://www.zerohedge.com/news/latest-congressional-budget-outlook-2012-2022-released


CBO saying UE is at least 10% today.   

[Soul Crusher]

http://www.businessinsider.com/the-5-scariest-debt-and-unemployment-charts-from-the-cbo-report-2012-1

[dantelis]

The growth rate is better than it has been since 2005, so don't know how the author can say that 2.8 % annual growth is bad.  Looking at the chart on Google public information, the GDP has risen considerably since the bottom in 2009.  (In fact, over 5%. )   

I definitely don't think things are as rosey as some let on, but think this guy is skewing the numbers just as much as those he accuses in the government.

http://tinyurl.com/87qd5e3

[Soul Crusher]

CBO: Taxes Will ‘Shoot Up by More Than 30 Percent’ Over Next 2 Years
CNSNews ^



CBO: Taxes Will ‘Shoot Up by More Than 30 Percent’ Over Next 2 Years By Terence P. Jeffrey January 31, 2012

(CNSNews.com) - The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.

At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.

“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”

The U.S. economy, CBO projects, will perform “below its potential” for another six years and unemployment will remain above 7 percent for another three.

“The pace of the economic recovery has been slow since the recession ended in June 2009, and the Congressional Budget Office (CBO) expects that, under current laws governing taxes and spending, the economy will continue to grow at a sluggish pace over the next two years,” said CBO. “That pace of growth partly reflects the dampening effect on economic activity from the higher tax rates and curbs on spending scheduled to occur this year and especially next. Although CBO projects that growth will pick up after 2013, the agency expects that the economy’s output will remain below its potential until 2018 and that the unemployment rate will remain above 7 percent until 2015.”


(Excerpt) Read more at cnsnews.com ...