GDP Growth Manipulation
I have a friend, Tom, who is a 48-state big rig driver. He saw an increase in road construction just before the election, especially in “swing states” such as Pennsylvania, Ohio, and Virginia, as well as country-wide. He knows about what he is talking. He thinks that the highway construction jobs had two purposes: “shovel-ready” jobs from The American Reinvestment and Recovery Act (the stimulus) spending, and to boost the Gross Domestic Product (GDP). Both purposes were ultimately for the buying of votes. So, with Tom’s premise as a starting point, let’s examine what is currently going on with the GDP, as well as how the stimulus has been used in the past to have an effect upon the GDP.
The US Department of Commerce’s Bureau of Economic Analysis (BEA) announced on Friday, October 26, 2012, that the GDP grew at an annual rate of 2 percent in the third quarter of this year, due to increases in consumer and government spending. Consumer spending, about 70 percent of US GDP, grew at a 2 percent quarterly rate, while government spending grew at a whopping 9.6 percent quarterly rate.
The BEA also emphasized that the 2 percent growth rate is an “advance” estimate. For comparison, the BEA also said that the GDP grew at an annual rate of 1.3 percent in the second quarter of this year, down from the BEA advance estimate of 1.7 percent.
“The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The ‘second’ estimate for the third quarter, based on more complete data, will be released on November 29, 2012.”
The MSM announced the growth rate, but I could not find where the MSM said the BEA announcement that the growth rate was an advance estimate, nor could I find that the MSM announced the two subsequent estimates the BEA schedules: the Second GDP announcement on November 26 (well after the election), and the Third GDP announcement on December 20. But the MSM did say how this announcement will help Obama. The White House was quick to latch onto the BEA report, saying that the economy is recovering from its 2008 collapse.
But nowhere could I find the MSM or the White House offer this bit of information:
“Economists often say U.S. GDP needs to grow around 3% a year to bring unemployment down significantly.”
To support Tom’s premise, look at what happened in 2010. The Congressional Budget Office (CBO) said that the stimulus added 3.3 million jobs and increased the GDP by up to 4.5 percent in the second quarter of 2010. “Vice President Joe Biden issued a statement on May 26, 2010, saying the CBO report ‘is important validation that the action we took to rescue the economy last year has not only pulled us back from the brink, but put us on a firm path toward economic recovery’.” The CBO also, in May 2010, said that the effect of the stimulus will continue to increase through 2010. The ABC News site did say that all of the figures it announced were CBO “guesstimates,” but nowhere did it offer whether the CBO used advance, second, or third figures.
And, to further support Tom’s premise, government spending increased by 9.6 percent in the third quarter of 2012. Government spending was down by 0.2 percent in the second quarter of 2012, and it dropped in the seven previous quarters as well. Coincidence? Your call.
Did Obama and his minions pull the same stunt that they pulled just before the 2010 elections?
By the way, look at this map to see which two states have received the most stimulus money: California and New York, the two states with the most electoral college votes. Coincidence? Again, your call.
But that’s just my opinion.
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Above: “Consumer spending grew at a 2 percent quarterly rate, while government spending grew at a whopping 9.6 percent quarterly rate.”
Do you really mean that, or do you mean “anualized rate”.
An increase of 9.6% quarterly would be at a 39.6% annualized rate. That seems too large.