Here’s the news: Gross domestic product expanded at a 2.2 percent annual rate in the first quarter. The White House calls the report “encouraging.”
Now here’s the other news: GDP dropped from the previous quarter, when it was 3.0 percent annual growth, equalling a decline of about 26 percent in one fiscal quarter.
The spin: At least it’s going in the right direction, White House officials said, meaning anything higher than zero. It could have been worse — some people were expecting 1.5 percent. The economy just needs a little more work to get back on track. At least consumer spending is up.
The news they buried: Consumer spending is up largely due to higher gasoline and food costs — in other words, spending on things you can’t not spend on. Also, a big drain on the GDP is an ongoing reduction of defense spending. Business spending is also down for the first time since 2009.
Counterpoint: Consumers did buy more cars in the first quarter than they have in four years.
Counter-counterpoint: In large part, that’s due to people being on waiting lists for Japanese cars, supplies of which were disrupted last year by the tsunami, not people buying American cars.
What you’ll find at the end of the news stories, if at all: A separate consumer spending index found personal spending rose at a 2.4 percent rate, double the fourth quarter.
The bomb THEY don’t want you to know about: Even stripping out energy costs, personal consumption expenditures are above the Fed’s 2 percent inflation target.
That 2 percent mark was set by the Fed as the point beyond which the economy would need to be slowed down by raising interest rates.
Raising interest rates would tie an anchor around the economy, which has been struggling to get its feet under it ever since President Obama took office.
Considering Obama’s performance, you can’t help but wonder if the prospect of further tanking the economy isn’t what the White House finds so “encouraging.”