Economy and Economists still in the tank

George Rebane

Well, the numbers for 14Q1 are in, and again they are neither pretty nor what that dismal cohort representing the 'dismal science’ predicted.  The nation’s economic mavens – those whose opinions are at least counted – said that first quarter GDP would be up 0.1%.  Not even close.  The real news is that the economy tanked at -2.9%, and will be unbelievably lucky to eke out a positive number for all of CY2014.

All this occurred as the Obama administration was trying to get some happy dancing going with a conference of business leaders who expect to game the climate change hysteria.  Leading the 76 trombones is millionaire Tom Steyer who made his millions in his since divested hedge fund that invested hundreds of millions in fossil fuels.  Today he argues that no one else should have those same opportunities.  Meanwhile, the Obama lackeys continue shouting their huzzahs to a non-existent recovery when instead they should be singing its requiem.  (RR readers still confused on the notion of a recovery should review ‘The Recovery Rigmarole’.)

But let’s get back to that sorry science and their acolytes, the economists.  These guys have no clue as to what is in the ‘black box’ that represents the nation’s economic system.  All they can do is access a dodgy Ouija board based on various cobbled regression functions that try to masquerade as a true transfer functions of the economy.  (The technical reader will know that understanding the real transfer function means understanding the sub-processes of the economy and their integration contained in the black box which today’s economists can only view in terms of its inputs and outputs over arbitrarily selected time windows.  Given interest, I will expand.  But I digress.)  In any event, neither the politicians nor the media (lamestream and legitimate) understand this little nuance, so they keep citing the quantitative economists as if they really knew something (also see N. Taleb).

Nevertheless, the stock markets keep going up for the reasons previously explained here – the dismal economic news means that the Fed will keep interests rates low through the printing of baseless money and lending it to the Treasury.  The economy keeps getting it in the shorts from Team Obama from the constant avalanche of business destroying regulations and tax hikes, the most egregious and unreported one being the implicit hike delivered by Obamacare which analysts have computed to be the 3rd highest tax hike since 1946.

So what RR has long advised its readers as the ongoing Depression2 continues to be vindicated by the non-stop increases in taxes, regulations, spending, and debt.  Every clever investor in the market is betting that he can bail out before it all hits the fan.  Again, I offer this observation in the continuance of RR’s unsurpassed record of excellence in forecasting ;-)

Comments

[Bill Tozer]

The old joke is that you put 10 economists in a room and you get 9 different opinions. One more quarter like this and we are back in recession. When you are bouncing along the bottom waiting year after year for any green sprouts to form a branch or hopefully even a tiny bud, then if won't take much for the green sprouts to turn brown and wither. A storm, a tax hike, anything.

Personally I think the results for the second quarter will show some growth and we will continue to bounce along the bottom fishing for halibut. Maybe catch a ling cod when you finally reel in the lines for the day and win the jackpot for the biggest small fish.

Opinions vary, but despite opinions any growth is slow and measured. Just shows how astonishing resistant our economy is and how truly strong indeed is the spirit of the enterprising American. Without the American spirit we would have undoubtedly fallen off the cliff by now considering what Fed, State, and local fiscal policy is doing to even the most optimistic entrepreneur.

OK, some opinions:

http://online.wsj.com/articles/gdps-obamacare-downgrade-1403738610

http://www.bloombergview.com/articles/2014-06-25/big-losers-in-gdp-report-democrats

It is never a good sign when exports decrease and imports increase. We have a fragile economy, duh. Carbon taxes, Obamacare taxes, gasoline taxes, skyrocketing social services burdens all coming down the pike at us so fast it makes your head spin. Like trying to keep up with all the "We weren't told" coming out of 1600 Pennsylvania Ave. I just can't keep track, but I know where we are heading. At least we are better off than Christopher Columbus who did not know where he was going and didn't know where he was when he got there. Yet he was smart enough to have a woman pay for it all. Yes, Columbus held a trump card we don't have, but I digress.

We know where this train is headed. Economists will offer their opinions, but we know this train is about to run out of track as long as Barry is playing the Engineer.

[Bill Tozer]

I just glanced at some headlines, skimming through data. Durable goods orders fell in May, housing starts turned south and the hits just keep on coming.

We have structural problems now. Stagnate wages and rising prices. Less pocket change means less spending on consumer goods which means less employment which means less hours/raises for the worker which means less durable goods and factory orders and housing starts which means less....and so forth and so on....ashes, ashes, we all fall down.

Guess when you spend the last 5 years bashing business and raising taxes on "those with money" you get what you get and you don't throw a fit. Time to stop blaming the weather.

[Account Deleted]

"Without the American spirit we would have undoubtedly fallen off the cliff by now considering what Fed, State, and local fiscal policy is doing to even the most optimistic entrepreneur."
It's my opinion we have already fallen off that precipice. Good ol' 'Murcan can-do is keeping a lot of us in good shape and we have so far to fall, it will be a while before the full effects are felt.
Money printing and hand outs are increasing the distance between the edge of the cliff and the bottom. But the increased distance only increases the impact at the bottom. It works great until it doesn't.
Economist rarely look at the big picture. What percentage of working age folks are truly producing something of value that a free market really wants? Sitting at a desk pushing paper around or researching grant money is just re-arranging the rocks at the bottom of the hole.
A person produces or they don't. Personal spending is just an indicator - it's not wealth production. Printing money is not wealth production. Hiring thousands of folks to be Obamacare 'navigators' is not wealth production. Hiring thousands of engineers in order for businesses to be in compliance with endless govt regs is not wealth production. Until Mr Krugman and the ninnies that follow his thinking get real, we just fall farther and faster. The surface at the bottom isn't getting any softer.

[fish]

George can just close this thread now Scott!

Hat tip!

[George Rebane]

Standing on the shoulders of Harry Truman's "Won't someone please send me a one-armed economist.", isn't the perhaps older joke that 'given 10 economists you have 23 opinions'?

[Bill Tozer]

Yes, good post Mr. Scott. They say the difference between a rut and a grave is merely the dimensions.

[fish]

Yes, good post Mr. Scott. They say the difference between a rut and a grave is merely the dimensions.

Indeed Bill….and in an attempt to assist the FUE and the members of his circle….the difference between Ass kissing and Brown nosing……depth perception.

[Bill Tozer]

Mr. Fish, you have done a fine public service by assisting the comprehensively challenged. You have earned your gold star for today. We must always think of others on this pilgrimage through life.

[Walt]

But "O" and the talking head LIBS say things are improving nicely.
Seems the Left is back to their favorite fuzzy math calculations.
Maybe "O" has heard about the economy from the news by now.
Another economic disaster has also occurred. The publisher's of Hildabeast's grand book paid her millions in advance. Sales crapped out
and now they are stuck with truckloads of books no one will even take for free. It's so full of comical BS, MAD magazine may sue for copyright infringement.

Despite the economic poo pileup, the EPA is out to close power plants, which will drive up the cost of doing business. Ca. is no better.
More taxes and fees are bing demanded. OH JOY!! That's sure going to help.
Then of course there are all those "new hires" being shipped from the boarder to every state in the union. ( I'm sure they will want that 15 dollar minimum wage.. They heard about that too.)

[Bill Tozer]

RE: The economy and rising prices. First and foremost, the CPI of 2014 resembles nothing like when in 1960 we really began to track inflation. Both parties have monkeyed around with it, but Clinton really tweaked it to beyond recognition. The current Administration is no different. That is why there is negligible official inflation. And if you believe the official CPI, you are one very very sick puppy.

What does this have to do with the economy? Well, all economists (pontificating about an inexact science to be kind) say that we have stagnate wages and rising prices. Stagnate wages that is unless you work for the VA, IRS, EPA, Treasury, Commence, or are a big wig in Barney the Purple Dinosaur's little mosquito county nestled in the foothills of the Sierra Nevada. Opps, I done forgot Truckee. My apologizes to those of the liberal worldview.

Anyway and anywho, rising prices are the killer for those with stagnate wages. It takes growth to increase the workforce's wages, duh. Real growth, not Obama's doctored GDP figures. He can doctor them all day long, but even he can't hide them forever. 3x0=0. One solution would be deflation which is politically unpalatable.

Citizens of Ohio and South Carolina are hotter than a hornet about the Administration's direct purposeful plan to raise their electric bills. Signs and billboards are sprouting up "Don't raise my electric bill." This coupled with the juggernaut of higher health care premiums is just one reason why we have emerged from the Great Recession 5 years ago poorer than before The Great Recession. First time in history.

Here is what we can expect coming to a village and township and farm near you: The silver lining is of course the Dems and assorted Serious Liberals can get their long overdue free psychological evaluations and quasi-treatment. Time to pay the piper for the rest of us.

http://www.bloombergview.com/articles/2014-06-26/obamacare-s-prognosis-grows-dimmer?cmpid=yhoo

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[Bill Tozer]

The above is more proof that old geezers are standing in the way of progress. The liberal plan: Die, geezers, die! For Agenda 21 to work, it HAS TO HAVE a population decline of at least 20%. Everything is going according to plan.

[Russ Steele]

According to a Fox News Report this morning there are 40,000,000 people who are living in houses they cannot afford. With average income dropping by $2,600, many are paying more than 30 percent of their income, which is considered the maximum. Some are now paying 50% of income to stay in their homes. This is unsustainable.

[Bill Tozer]

It ain't easy being both an economist and liberal these days. Burn the history books and everything will be ok.

http://www.foxnews.com/opinion/2014/06/27/why-cant-be-both-economist-and-liberal/

[Bill Tozer]

OK, really for some economy jokes? Economists are not renown for their humor, albeit some small business folks are:

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