Wall Street ended Friday on an incline while the press was overwrought — or happy to be overwrought — over news that American Gross Domestic Product expansion for the first quarter of 2005 was 3.1%. "Slowest growth in two years," charged headlines. True; or so said the initial report. GDP was believed to have grown by 3.1% during the three-month period previous to last, the fourth quarter of 2004, before its twenty-percent revision upwards four weeks later. Larry Kudlow doesn't take downturn talk seriously:
Three months ago the first government estimate of gross domestic product for the fourth quarter of 2004 came in at 3.1 percent at an annual rate. At the time, the market consensus expected 3.5 percent growth. Immediately, the mainstream media started talking about an economic slowdown. Turns out, that 3.1 percent was finally revised up to 3.8 percent. ...Well, history is repeating itself — even though, if you look under the GDP hood, you’ll find that the country’s economic engine is humming along.
Bears, Kudlow notes, have had a penchant for seizing on one or two clunker reports not to draw attention to a lagging market sector, which is reasonable and sensible, but for predicting economic entropy — too often politically motivated. Or they've dismissed positive general indicators while decrying flat numbers on employment, wages and the consumers' well-being. Were they watching the news on Friday? As oil prices fell the Commerce Department released two figures defying expectations: income rose by a third more than forecast, consumer spending up twenty percent above predictions.
Is today's economic disappointment objective or subjective?
ON 'SLUGGISH': I've made this comparison before but as a good one, it's worth repeating — the United States' economy outsizes anything in the world it hasn't outperformed. At 3.1% growth, America expanded at 500% the United Kingdom's pace; 3000% of Australia's; over 700% of Japan's; and unspeakably greater than Germany's pace, since the federal republic's Gross Domestic Product most recently shrank.
Where can this perspective be found in the news? Scarcely anywhere since it's hidden out of sight, says Bizzy Blog. Why must America consistently perform above average to stave off sudden, gripping media panic? Or has the bad press anything at all to do with economic expectations?