Wednesday, September 24, 2008
In the spirit of Phil Gramm, in whose view any economic slowdown is nothing more than a "mental recession" for a "nation of whiners", comes what must be the stupidest editorial ever written on the state of the U.S. economy, by one Debra J. Saunders, culled from the San Francisco (!?!) Chronicle.
This has gone by various other titles as it was foisted upon the world over the last week or so. In the local paper it was emblazoned with something like "You must be really stupid to think the economy is bad."
(No, not really, but something almost as inane.)
Just don't call the U.S. economy solidIt degrades rather quickly from there, summoning the wisdom of Kudlowite Donald Luskin who notes he has lived through five or six recessions and "this ain't one."
Debra J. Saunders
John McCain was right when he said Monday that despite the bad news about Lehman Brothers filing for bankruptcy and AIG trolling for help from Uncle Sam, "the fundamentals of our economy are strong." As politicians running for the White House learn, honesty is a commodity best used sparingly on the campaign trail. Voters apparently believe that America is in a terrible recession - even though the gross domestic product grew at an annual rate of 3.3 percent last quarter and grew by some 0.09 percent in 2008's first quarter. When the public is in full panic mode, McCain could take a lesson from Barack Obama, who is running ahead of the stampede.
On the campaign trail Wednesday, Obama bemoaned "the most serious financial crisis in generations." He said the exact same words the day before.
You can tell it's the most serious financial crisis in generations because the unemployment rate is 6.1 percent - which, The Chronicle reports, represents a "five-year high." When the unemployment rate was 5.7 percent rate in July that was a "four-year high." The Associated Press reports that the number of troubled banks is also at a "five-year high." Five-year highs? These are the statistics that herald the worst financial crisis since the Great Depression?
As is the norm for a piece like this, the flaw in Ms. Saunders case is reliance on government statistics that are not only "cherry-picked" very easily to bolster whatever argument one wants to make (e.g., the GDP statistics above), but unreliable as well, after having been twisted and cajoled by economists over the last 25 years to produce rosy results wherever possible (e.g., still relatively low inflation by historical measures).
More importantly, the economic data in support of Ms. Saunders' case is subject to massive revisions that only reveal the true nature of the economy a year or so after the fact - long after everyone has forgotten about this op-ed piece. When the 2008 labor market data is revised in 2009 and 2010, we'll probably see that close to another million jobs were lost.
What could explain supply-side nutters getting even nuttier this fall?
There's an election coming up in another month.