Today, the White House's Office of Management and Budget published its Mid-Session Review (large PDF), an economic forecast projecting, among other things, that Gross Domestic Product (GDP) for calendar 2011 will be 1.7%. That doesn't sound like much (and it isn't), but to get there growth will have to almost triple its most recently reported level during the second half of the year. Second-half growth will also have to exceed the estimates of most economists.
Good luck finding any skepticism in the press over OMB's numbers. What follows is the numerical runthrough, followed by two media coverage examples.
Running through why OMB's calendar 2011 growth estimate is doubtful is pretty easy:
- First-quarter growth was an annualized 0.4%.
- Second-quarter growth, pending any September revision, was an annualized 1.0%.
- To achieve 1.7% growth for the calendar year, second-half growth will have to come in at an annualized 2.7%.
- If, as many expect, the final revision to second-quarter GDP is adjusted down to 0.7%, second-half growth will have to be another tenth of a point or so higher.
Earlier today, the Associated Press's Christopher Rugaber, in his report on unemployment claims, wrote: "Economists expect growth will only improve to about a 2 percent (annualized) pace in the second half of this year."
We're already two months into the third quarter, and the economic reports we've seen during that time hardly support a belief in Rugaber's reported estimate, let alone the White House's (and that's being extremely kind in both instances).
Yet Rugaber's AP colleague Andrew Taylor, in covering the OMB release, while at least framing the White House's in gloom, exhibited no skepticism, and made no reference to the lower figure Rugaber named, let alone some of the much lower ones which have been cited by others:
The bleak figures from the Office of Management and Budget, which also projected overall growth this year at just 1.7 percent, serve as further confirmation of a sputtering economy while dramatizing the challenge Obama will face in making his case for re-election. The 1.7 percent growth rate is a full percentage point less than the administration predicted at the beginning of the year.
Do these guys ever communicate with each other, or read each others' work? At CNNMoney.com, Jeanne Sahadi also didn't question the White House's word:
The Office of Management and Budget also lowered its estimates for annual GDP growth by roughly a percentage point for this year, next year and 2013. Its forecasts for 2015 and 2016 are somewhat higher than they were.
OMB said in its "mid-session review" that it now expects the economy to grow at a 1.7% rate this year, down from its 2.7% forecast in February.
Growth is expected to be 2.6% next year and 3.5% in 2013.
We should be so lucky.
Recall that the first eight quarters after the 1980s recession ended growth averaged well over 6% while Ronald Reagan was President. After the most recent recession officially ended in June 2009, the eight-quarter growth average has been 2.5%. During quarters 5 through 8, the average under Reagan was 6.9%; under Obama, 1.6%.
The AP and CNN would have been better off using the approach of Jackie Calmes at the New York Times. Given two chances to note the hard-to-handle White House growth figure (here and here), Ms. Calmes "solved" the problem by not mentioning it either time.
Cross-posted at BizzyBlog.com.