The recession-deniers were out in force yesterday after the "better-than-expected!" GDP figures came out: See? The economy GREW in Q1! We aren't in a recession! All that horrendous economic and housing data is just media hysteria!
Here's what they didn't tell you:
First, those are just preliminary numbers. Maybe hold the champagne until the several rounds of revisions are out.
Second, 0.6% growth is horrible, especially when you consider that the population is growing at least 1%. On a per-capita basis, GDP was down.
Third, as the NY Post's John Crudele explains, the much ballyhooed "growth" was the product of three key inputs, none of which is a sign of consumer recovery, and one of which is absurd:
* government spending (deficits),
* inventory growth (companies buying stuff to put on shelves), and, most importantly,
* a 2.6% inflation assumption.
Get that? To calculate that the economy grew 0.6%, the government had to assume that inflation was only 2.6%. Anyone out there who buys gas or food occasionally think that inflation is only 2.6%? Didn't think so.
Move that inflation assumption up to even 4%, says John Crudele, and GDP in Q1 was down. For the second quarter in a row. Which makes this an official recession. As if we didn't know that already.