Joe Doakes from Como Park emails:
The US economy grew in the first quarter of 2016, but only a tiny bit, 0.5%. That’s technically enough to keep it from being called a “recession.”
First, do you believe that number? Economic estimates are routinely announced with pronounced spin showing how well the administration’s policies are working, then quietly revised downward a few months later. There’s not much room to revise this number downward.
Second, look at the formula for calculating GDP:
Gross Domestic Product = Consumption + Investment + Government Spending + (Exports – Imports)
If the federal government wants the GDP number to look good, it can manipulate the formula by increasing government spending to offset decreases in Consumption, Investment and Net Exports. But federal government spending slowed down in the first quarter. And the GDP number is falling as a result. The implications are important.
It means there never was any growth in the Consumer or Investment side of the economy, that’s all been propped up by federal government spending. In other words, we’ve been experiencing negative economic growth for months, maybe years, but it’s been masked by federal government spending. I’m looking at you, Barack Obama, and your $20 Trillion national debt.
The take-away is simple: don’t worry about Great Depression 2.0 coming; it’s already here. Worry about what happens when the ordinary public figures it out.
Like we need any more good news this week…