The Claude Rains Recovery

“No Recovery?” In the best Claude Rains fashion, “I am shocked, shocked!”

There is no economic recovery, and there will be no economic recovery this year and probably not next. Yet the media, mainstream economists and the Administration insist we are in the midst of one. Things are definitely getting better, at least according to them. This concerted propaganda effort is reminiscent of a major Madison Avenue advertising campaign designed to wear down the resistance of the targeted buyer. The campaign is not based in reality. Its success is dependent upon three things: 1) constant repetition; 2) the public’s short memory span; and 3) the public’s economic illiteracy.

As time passes, however, more data appears and contradicts the “advertising” message. Spinning the data becomes harder and harder to do. Daryl Montgomery provides an excellent article detailing the inconsistencies of the data with the claims of a recovery. He states:

A number of economic reports in the last few days indicate that the U.S. economy has not only not failed to recover from the recession, but continues to fall deeper into a hole. Banking, consumer confidence, employment numbers, durable goods and the housing industry – each representing a different aspect of the economy – are all sending out troubling signs. Despite the onslaught of negative data, mainstream economists continue to echo the official U.S. government view that “the recovery is still on track.”

For an old movie buff, each spinning provides a “Rains moment.” No, supporters do not express “shock” when data is outside their desired parameters. Rather they use institutionalized double-speak to provide their cover. Negative results are “unexpected,” “likely to reverse next month,” “due to seasonal adjustments,” “highly unusual,” etc. etc. Whether the reporters and analysts are Rains fans or not, their shtick looks like it originated in the movie Casablanca.

The campaign is failing with the public. The continued repetition of the data is drowning out the “Joe Isuzu” government campaign. To paraphrase that great economist, Marx (Groucho, that is), “what are you going to believe, the data or what I am telling you?”

Montgomery concludes his worthwhile read:

There is little evidence that the U.S. economy has recovered from the recession or is going to recover from the recession anytime soon. The support for the recovery viewpoint comes from government statistics that have been highly manipulated. All governments, of course, want to present a rosy picture of their handling of the economy for political reasons and it is much easier to make the numbers better than it is to actually make the economy better. Eventually the public catches on to this game, however. The recent consumer confidence numbers indicate that the American public is no longer buying the public relations story, but is starting to pay more attention to the realities they have to face on a day to day basis.

The following list of recent economic news was provided by Financial Armageddon on Feb. 25:

“U.S. Jobless Claims Rise Unexpectedly” (Associated Press)

The number of newly laid-off workers filing applications for unemployment benefits in the U.S. unexpectedly surged last week after having fallen sharply in the previous week. The gain dampened hopes about how quickly the labor market may improve this year.

“U.S. Economy: Equipment Demand Slows to Start 2010″ (Bloomberg)

Orders for durable goods excluding transportation unexpectedly fell 0.6 percent, the most since August, while a measure of bookings for business equipment showed its biggest decrease in nine months, the Commerce Department in Washington said.

“New Home Sales Hit Record Low, Prices Tumble” (Reuters)

Sales of new homes unexpectedly fell to a record low in January while demand for loans to buy homes hit a 13-year low last week, fanning fears of renewed weakness in the housing market.

“Consumer Confidence in U.S. Falls More Than Forecast” (Bloomberg)

Confidence among U.S. consumers fell more than anticipated in February to the lowest level since April 2009 as the outlook for jobs diminished, a sign spending may be slow to gain traction as the economy recovers.

“Economic Indicators Rise Less Than Expected, Mixed Open” (Marketplace)

The Conference Board reported that its index of leading economic indicators rose in January, but the gain was smaller than expected.

“Consumer Sentiment Index in U.S. Declined in February” (Bloomberg)

Confidence among U.S. consumers unexpectedly fell in February from a two-year high, signaling Americans may not be convinced the job market is turning around.

The Reuters/University of Michigan preliminary consumer sentiment index dropped to 73.7 from January’s 74.4. The measure averaged 88.9 during the economic expansion that ended in December 2007.

“Businesses Slashed Wholesale Inventories 0.8 Percent in December, Weaker Than Expected Showing” (Associated Press)

Businesses slashed wholesale inventories sharply in December, a much weaker showing than had been expected.

The Commerce Department says that wholesale inventories were reduced 0.8 percent in December. Economists surveyed by Thomson Reuters had expected inventories to rise by 1 percent during the month.

“Instant View: ISM Services Index Below Forecast in January” (Reuters)

The U.S. services sector grew less than expected in January, according to an industry report released on Wednesday.

Monty originally posted a similar article on American Thinker.

3 Comments

  1. i was starting to contemplate i might be the sole young woman which thought about this, at the very least at present i learn i’m not extreme :) i’ll make sure to look at a number of various other posts after i get a tad of caffeine in me, it is really hard to read without having my coffee, cheers :)

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