Thursday, August 28, 2008


3.3% GDP growth sounds pretty good, except:

GDP swelled 3.3% at an annual rate in the second quarter, the Commerce Department said. That came on the heels of 0.9% growth in the first quarter, meaning the economy grew at more than a 2% annual rate during the first half of the year — a time when many economists, including Federal Reserve staff, thought it would shrink.

But the forecasts of a shrinking economy may not be so far off the mark after all. Gross domestic income, which Fed officials have in the past highlighted as perhaps a better measure than GDP, advanced just 1.9% at an annual rate last quarter after contracting the two previous quarters. Thursday’s report is the first to show first quarter GDI in the red.

Two consecutive quarterly declines in activity — usually defined by GDP — is the popular definition of recession, though the National Bureau of Economic Research uses a more complicated gauge to make its official determination, usually several months after the fact.

What is particularly interesting is the cynicism and bitterness of the commentors; you'd expect people commenting on an economics blog sponsored by the WSJ to be, at the very least, somewhat sympathetic to the Republican/conservative cause, but these people don't come across that way. Probably, the kind of people who snarl out "Democrat Party" and toss off lines about appeasement and so on aren't the kind of people interested in dissecting a GDP report.

I spoke with two people today who were cynical and bitter themselves, both retired white men with more than a couple of quarters to their name. One called the GDP numbers "bullshit," and the other, a very mild-mannered and generally nice guy, surprised the hell out of me by all but saying he thought the Bush people were cooking the books to help McCain. I had never heard one pip of political speech out of either one of them before. At any rate, I thought today's numbers would be good for McCain, in the sense that the Republicans could count on the media to talk about how things are looking up, but that hasn't been the response at all. There is a lot of anxiety out there, a lot of pain, a lot of frustration, but not very much confidence in the integrity or competence of the country's political leadership -- even less confidence than usual. And despite this, McCain is still hanging around in the polls.