At the Associated Press yesterday, Christopher Rugaber's writeup on the latest economic growth projections of the National Association of Business Economists (NABE) contained several glaring weaknesses.
Take the headline (quite possibly not his doing) and his opening sentence. The headline, "SURVEY: GROWTH TO PICK UP, HIRING STEADY," seems designed to ensure that those who only look at headlines in print or on their online devices will remain blissfully ignorant about the economy's first-quarter contraction. The fact is that following a quarter of shrinkage, economic growth first has to "return" or "resume" before it can "pick up."
Rugaber's first sentence continued in that vein (bolds are mine):
U.S. economic growth should accelerate in the second quarter and remain healthy for the rest of this year, according to a forecast by a group of U.S. business economists. Still, growth for the full year will likely come in lower than they previously estimated.
Again, Chris, you can't "accelerate" until you start moving in a positive direction, which didn't happen in the first quarter.
Here's more of Rugaber's report:
Job growth should remain steady and consumer spending will also likely pick up, a survey by the National Association of Business Economists said Monday. The survey of 47 economists from companies, trade associations and academia was conducted from May 8 to May 21.
The survey also found that economists increasingly agree that the Federal Reserve will end its bond purchase program by the end of this year.
That's partly because economists are optimistic about growth for the rest of this year: They expect it will jump to 3.5 percent in the second quarter and remain above 3 percent for the rest of the year.
But the pickup comes after harsh winter weather caused the nation's gross domestic product to contract 1 percent in the first three months of the year, much worse than analysts had expected. GDP is the broadest measure of an economy's output.
That weak first quarter reading has caused many economists to lower their expectations for 2014 as a whole. The NABE survey found that economists now project growth will be just 2.5 percent this year, down from a forecast of 2.8 percent in March.
... The NABE's survey is slightly more pessimistic than the Federal Reserve's most recent projections, released in March. The Fed expects growth will be between 2.8 percent and 3 percent this year. The Fed may lower its growth outlook for this year when it releases its next forecasts later this month because of the first quarter's contraction.
There are at least three other weaknesses in Rugaber's writeup.
First, it took him six paragraphs to get to NABE's downwardly revised projected full-year growth of 2.5 percent. Many AP subscribers likely only printed or broadcast the contents of the first few paragraphs, and won't get to that quite mediocre but important projected number. Maybe that's the point.
Second, he didn't note that the May 8-21 timing of the NABE survey places it before the big downward revision of first-quarter growth — from an original annualized 0.1 percent to 1.0 percent — which the government reported on May 29. It's reasonable to believe that NABE's economists, if queried today, might take their reported 2.5 percent full-year growth estimate down even further.
Third, Rugaber described that first quarter contraction as "1 percent," without noting that it's annualized. Readers who get that far will believe that the economy really shrank by a full 1 percent in the quarter, when it really contracted by about 0.25 percent. That accidentally works to make the situation appear worse than it is — an AP rarity during the past five-plus years.
Cross-posted at BizzyBlog.com.
