In his coverage of the Conference Board's Consumer Confidence report released earlier today, the Associated Press's Martin Crutsinger conveniently avoided using quote marks when he wrote that "Conference Board economist Lynn Franco said the tax increase was the key reason confidence tumbled in January, making Americans less optimistic about the next six months." That isn't what Franco said.
Crutsinger also -- finally -- told AP readers and subscribers what other reporters and commentators have been saying for about two weeks, namely that analysts' estimates of economic growth in tomorrow's government report on gross domestic product are a for a very weak annualized 1%.
Here (in quotes) is what Franco said in the organization's release (bold is mine):
The Conference Board Consumer Confidence Index®, which had declined in December, fell further in January. The Index now stands at 58.6 (1985=100), down from 66.7 in December. The Expectations Index declined to 59.5 from 68.1. The Present Situation Index decreased to 57.3 from 64.6 last month.
... Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer Confidence posted another sharp decline in January, erasing all of the gains made through 2012. Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The increase in the payroll tax has undoubtedly dampened consumers’ spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock.”
Franco cited "the increase in the payroll tax" as an important factor, and in fact cited no other. That doesn't automatically mean that it "was the key reason."
I spoke briefly with Ms. Franco this afternoon, and she indicated that a component of the survey relating to income noted in the final sentence of the press release showed a larger drop than seen in other questions, leading her to cite the payroll tax increase as she did. She also volunteered that a reading of 80 is very often an indicator of a developing or impending recession, something Crutsinger and other AP reporters have not been telling their readers, possibly because the survey has been below that level for four years or more.
Franco's entire the press release quote was right there, and Crutsinger should have used it in its entirety. But instead he chose to spin it, keeping the part about how "it may take a while for consumers to recover" portion. How typical.
It may be a long "while." As seen above, confidence about the longer-term situation fell by more than the short-term (8.6 points vs. 7.3 points).
Additionally and more crucially, Crutsinger finally acknowledged the economy's weak growth situation:
Many economists predict economic growth slowed in the October-December quarter to an annual rate of around 1 percent. That would be much weaker that the 3.1 percent rate in the July-September quarter. Most economists don't expect growth to pick up much in the first quarter of 2013.
That's funny. The AP's Christopher Rugaber, ("Hopes rise as layoffs continue to decrease") just three days ago, reacting to the second straight flawed weekly jobless claims report, wrote that "Most economists think growth dipped below a 2 percent rate in the October-December quarter because consumer demand remains tepid." From "below 2%" to "around 1%" is one heck of a "dip," guys.
Zero Hedge showed that the concensus for fourth-quarter growth was about to go down to 1% in the wake of a marginal report on trade on January 11 -- and it did. Goldmn Sachs was predicting 1% in early December. Of course, there's always potential for an upside surprise, but the pertinent question at AP should be: "Where have you been, Marty and Chris?"
Cross-posted at BizzyBlog.com.