Matching predictions from Reuters and Bloomberg, the government's Bureau of Economic Analysis told us this morning that the economy grew at an upwardly-revised annualized rate of 0.9%.
As I've said frequently, this is nowhere near acceptable. But it sure as heck isn't a recession.
Initial reaction to the news by the Associated Press's Jeannine Aversa was unfortunately predictable (bolds are mine) --
The economy plodded ahead at a 0.9 percent pace in the first quarter - slightly better than first estimated - but still underscoring caution on the part of consumers and businesses walloped by housing, credit and financial problems.
..... The figure didn't meet a definition of recession, which under a rough rule is two straight quarters of shrinking GDP, and might raise hopes the country can dodge a full-blown downturn.
Uh, Jeannine, even if the figure had been negative, it wouldn't have met the definition of recession. The very existence of a "downturn" requires a negative number; yet Aversa writes of avoiding a "full-blown downturn," as if a smaller one already exists.
Will somebody please tell poor Jeannine that there hasn't been ANY "downturn" yet?
Speaking of people obsessed with recession, have you caught what Warren Buffett said recently? AP reported this earlier in the week:
Asked by Germany’s Der Spiegel weekly whether he thinks the U.S. could still avoid a recession, he said that as far as the average person is concerned, it’s already here.
“I believe that we are already in a recession,” Buffett was quoted by Spiegel as saying. “Perhaps not in the sense as defined by economists. … But people are already feeling the effects of a recession.”
“It will be deeper and longer than what many think,” he added.
Warren, what is “it”? Would that be the recession as economists define it, or as people feel it?
Gosh, I hate to be so cynical, but the report’s last paragraph struck me:
Omaha-based Berkshire has about $35 billion in cash and is looking to invest. Berkshire’s subsidiaries include insurance, clothing, furniture, natural gas, corporate jet and candy companies. Berkshire also has major investments in such companies as Coca-Cola Co. and Anheuser-Busch Cos.
It sure seems as if Buffett would benefit greatly if there is a recession -- or at least if people think there’s one, even when there’s not. The two companies cited are old reliables that investors gravitate to for safety when times are tough. Additionally, that $35 billion will buy a lot more in acquisitions if people think the economy is bad and asset prices go down.
Buffett also told CNBC in early March that “I would say, by any commonsense definition, we are in a recession.”
This is the same Buffett, with tons of money to invest, who famously said that he wants to invest in times of pessimism. Won't any reporter question his lack of detachment?
As far as I'm concerned, the Oracle has no clothes -- He clearly stands to benefit from feeding the pessimism, and appears to be on a campaign to do exactly that. After today's upward GDP revision, it looks like he'll have to spin harder.
This is an extended version of items posted on briefly here and here at BizzyBlog.com.
