Not too long ago the Commerce Department was pimping the release of a 3rd quarter GDP that reportedly grew at an annualized rate of 3.5%. Put aside the fact that the number was artificially inflated to begin with due to Cash for Clunkers (C for C) and the home buying tax credit. Our president was having none of that and claimed the number was an indicator that the economy was on the road back!
A few weeks later, the number was revised 20% downward to 2.8% but the administration still claimed economic success while critics wondered how the Commerce Department could be off by twenty percent.
Well, keep wondering critics because they just revised it again:
Today, Commerce backtracked even further. The annualized growth number for Q3 turns out to have been 2.2%, a revision of over a third from its original estimate two months ago:
The U.S. economy grew at a much slower pace than initially thought in the third quarter, restrained by weak business investment and a slightly more aggressive liquidation of inventories, according to data on Tuesday.
The Commerce Department's final estimate showed gross domestic product grew at a 2.2 percent annual rate instead of the 2.8 percent pace it reported last month. Analysts polled by Reuters had forecast the report to show GDP, which measures total goods and services output within U.S. borders, unrevised at a 2.8 percent growth rate in the third quarter.
So it turns out that they were off by 37%! One has to wonder if this was a legitimate accounting error (doubtful) or the result of pressure from the top to paint a rosy economic picture (likely). So now that we're off by 37%, how much did the economy really grow sans C for C? About 0.7%:
Motor vehicle output added 1.45 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change. Final sales of computers subtracted 0.08 percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from the second-quarter change.
That, surely doesn't paint the picture of economic bliss Obama was pushing a few months back. And since C for C didn't create new demand for autos – it simply moved future demand to the present – any hope for a "V" shaped recovery just got crushed as the true numbers were exposed after the accounting "errors" from Commerce.
So, when we remove ourselves from the Obama economic propaganda machine, we can, in reality, expect a prolonged economic sputter at best or a double dip recession at worst.
