Despite six months of optimistic spin on negative housing reports, weak jobs reports and a seemingly tone-deaf Federal Reserve, the economy has soldiered on.
If anything, it’s a testament to the underlying strength of the free market’s resolve that the economy hasn’t collapsed under the weight of regulation, reckless monetary policy, and an army of chief economists who apparently spell “economist” a-p-o-l-o-g-i-s-t.
(I’m compiling now all the dumbest pronouncements, downturns labeled “unexpected” and top-line BS reports where the real data buried deep down tells the ugly truth about the housing market and the economy for a special year-end piece – right now it’s just in a folder labeled “gartman.” By the way, if you headline a report with “unexpectedly” more than five times in a row, time to hire a new economist.)
Anyway, back to this week – Wednesday we’ll see if the Federal Reserve Open Market Committee has its act together, and we’ll see what the initial second quarter GDP is. Friday is jobs.
Note the word initial. This report from the Bureau of Economic Analysis has been revised twice after initial printing. In the first quarter it was initially reported at 1%, then revised down to -1.0% and then finally revised down to -2.9%.
Click the image to enlarge.
So don’t place too much trust in the initial number if it seems happy and high.
Current estimates are for the number to come in at between 2.4%-4%. This is highly doubtful. All the numbers that brought us to -2.9% haven’t changed that much.
Last week the IMF downgraded its 2014 growth forecast sharply to 1.7% from 2.8%. Something similar happened in the first quarter coming from international economists who don't feel the need to spin the economy to prop up Wall Street or the White House.
That revised first-quarter contraction was the biggest decline since early 2009 when it hit -6.9%, and contrasts with the previous estimate of a 1% contraction.
Mainstream financial analysts and pundits predicted a 2.6% growth in the first quarter of 2014, making it a nearly 5% swing.
So forgive me for being skeptical about market consensus this time around as well.
I’m not saying it’s going to be a contraction, but it’s not going to be anywhere near the middle ground of the expectations. If it breaks 2%, I’ll eat 50 boiled eggs.
What we have here is a failure to communicate without spin.
Finally, there is Friday’s jobs report, which also has to be taken with a grain of salt. Last month the mainstream financial press and the mainstream media both trumpeted the “great” jobs numbers for June.
Until we’re dealing with an actual, fact-based assessment of the economy and the housing market, we can’t figure out how to fix what is broken.
One thing is for sure — all the spin in the world won't change the momentum of 2014.
The thing is, people finally waking up from the media illusions of the first half would have known that if they hadn't bought into that MOPE* illusion in the first place.
The best directions in the world won't help you get somewhere if you don't know where you are standing.
(*MOPE = Management of Perspective Economics. It's the foolish idea that if The Fed and the media create the image of growth and the belief that things are getting better, then the economy will actually grow and things will actually get better.)