David Stockman reports:
This morning’s Q1 GDP revision might have been a wake-up call. After all, clocking in a -2.9%—-cold winter or no—it was the worst number posted since the dark days of Q1 2009. Well, actually, it was the fourth worst quarterly GDP shrinkage since Ronald Reagan declared it was morning again in American 30 years ago.
Stated differently, 116 of the 120 quarterly GDP prints since that time have been better. Even when you adjust for the Q1 inventory “payback” for the bloated GDP figures late last year, real GDP still contracted at a -1.2% annually rate.
Still, within minutes of the 8:30AM release, the Wall Street Journal’s news update did not fail to trot out the “do not be troubled” mantra. Not only did “…early second-quarter data indicates the economy has improved this spring as warmer weather helped release some pent-up demand” , but the reader was also advised in a declarative sentence that the US economy’s real growth capacity is far higher, implying that Q1 results were some kind of freakish aberration
There's more on the failed Keynesian freak show:
Well, here’s real GDP since the turn of the century. The average real growth rate is about 1.8%—-barely half the cited figure. So where does the 3% growth rate for “potential GDP” come from, then? The answer is that its Keynesian writ, and the pretext for the Fed’s endless monetary “accommodation” .
The Keynesians hope you don't find out that before the Federal Reserve Act : from 1869 to 1913 economic growth averaged
3.7% a year! It appears that a world without the Council on Economic Advisers and
Humphrey-Hawkins means higher economic growth, lower unemployment rates and deflation.
