NEW YORK – The White House appears determined to deliver in the president’s upcoming State of the Union speech a ringing message that economic growth under Obama is robust, with the DOW topping 18,000 for the first time and the Bureau of Economic Analysis reporting last week revised estimates placing third-quarter growth at an impressive 5 percent.
But critics, like ShadowStats.com econometrician John Williams, call it a smoke-and-mirrors illusion of economic data dishonestly calculated and reported to look rosy.
Put simply, Williams, in the most recent edition of his subscription newsletter, argues that the developing White House narrative of “the strongest economic growth in a decade” is nonsense.
He argues that the full economic recovery indicated by the real GDP numbers reported last week by BEA is “a statistical illusion created by using too-low a rate of inflation in deflating (removing inflation effects) from the GDP series.”
Williams further argues “no other major economic series has shown a parallel pattern of official full economic recovery and meaningful expansion beyond, consistent with GDP reporting.”
Williams’ analysis of retail sales, again adjusted to remove an artificially low rate of inflation, shows “a pattern of plunge and stagnation and renewed downturn, consistent with patterns seen in series such as consumer indicators like real median household income, the consumer confidence measures and in the unemployment and most housing statistics.”
WND previously has reported that real unemployment in the U.S., measured by traditional definitions that include an estimate of those forced to drop out of the labor force because jobs are lacking and those seeking full-time employment who are forced to take part-time employment is closer to 23 percent, rather than the 5.8 percent the Bureau of Labor Statistics reported in November, confirming Donald Trump’s accusation that Obama’s jobless numbers are “phony.”
Williams estimates that adjusted for inflation, orders for durable goods declined by 0.62 percent in November, versus a revised decline of 0.12 percent in October, and a revised September monthly decline of 0.68 percent.
He calculates that sales of existing homes showed a seasonally adjusted decline of 6.1 percent in November, with 9 percent of November sales of existing homes in distress (6 percent foreclosures, plus 3 percent short sales).
Contrast this with the narrative the White House suggested in a press release on Dec. 18, when the administration stated: “President Obama took office in the depths of the worst economic crisis since the Great Depression. Six years later, thanks to the grit and determination of the American people, and the decisive actions he took early on – to bring the economy back from the brink, to save the auto industry, and to build a new foundation for middle-class growth – we’ve made real progress.”
In a press briefing two days earlier, White House press counsel Josh Earnest delivered a similar tone, stating: “Now, 2014 was a milestone for economic progress in the United States, but there’s much more work to do.”
He continued: “This year, America’s businesses added jobs at the fastest rate since the 1990s. The most interesting statistic I’ve seen on this is that we’ve now had 10 consecutive months of more than 200,000 job created in the private sector in each of those months.”
The statements portray Obama as having engineered an economic miracle that is historic in nature.
“That is the longest streak in nearly 20 years,” Earnest continued. “And while many of these good, full-time, middle-class jobs and wages have begun to rise, it’s still too hard for many middle-class families to get ahead.”
Also, despite the Obama administration’s war on coal and refusal to support the Keystone pipeline, the White House claims credit for declining gas prices.
“And while gas prices have fallen as we’ve produced more oil, and the growth of health care costs has slowed as the Affordable Care Act has been implemented, it’s still too hard for many middle-class families to make ends meet,” Earnest emphasized.
Williams is of another opinion.
“U.S. economic activity is turning down anew, despite overstated growth in recent GDP reporting. The headline contraction in first-quarter 2014 GDP was the reality; the headline second-quarter GDP boom and continued strong headline GDP growth in third-quarter 2014 were not,” Williams concludes. “The more recent data appear to have been spiked, at best, by overly optimistic assumptions on the part of the Bureau of Economic Analysis (BEA). At worst, the bloated growth estimates reflect heavy political massaging.”
Williams anticipated current BEA revised estimates of third quarter growth will “suffer heavy downside revisions” in the July 30, 2015, benchmark revision with early indications predicting an outright contraction in fourth quarter 2014 GDP.
“Future, constructive Federal Reserve behavior – purportedly moving towards normal monetary conditions in the currently unfolding, perfect economic environment – is pre-conditioned by a continued flow of ‘happy’ economic news,” Williams writes.
“Suggestions that all is right again with the world are nonsense,” he continues. “The 2008 Panic never has been resolved, and the Fed soon will find that it has no easy escape from its quantitative easing.”