On Friday, the government reported that the economy grew by an annualized 2.5 percent during the first quarter. Earlier today, in Part 1 of this series, (at NewsBusters; at BizzyBlog) I showed that while most news organizations, including CNN, Bloomberg and Reuters, characterized that news as a disappointment, especially comparred to expectations of 3.0 percent or more following an awful fourth quarter of 0.4%, Martin Crutsinger and Chris Rugaber remained irrationally exuberant, not only about the "quickened" pace of growth but about prospects for higher growth in the second half of this year.
In Part 2 (at NewsBusters; at BizzyBlog), we saw how even others at the self-described Essential Global News Network disagreed with Crutsinger's and Rugaber's joint assessment. A "News Summary" item was headlined "STOCKS STALL AS GROWTH DISAPPOINTS." A report by AP Markets Writer Steve Rothwell was headlined "STOCKS STALL ON TEPID US ECONOMIC GROWTH," and forecasted slower growth during the rest of the year. There is one other key paragraph written by the pair of AP economics writers which deserves separate vetting. It follows the jump (bolds are mine throughout this post):
In a healthy economy, with an unemployment rate between 5 percent and 6 percent, GDP growth of 2.5 percent or 3 percent would be considered solid. But in today's still-struggling recovery, with unemployment at 7.6 percent, the economy needs faster growth to generate enough jobs to quickly shrink unemployment.
The AP pair's benchmarking, while at least acknowledging that current growth needs to be faster, lowers the bar of acceptability below that of post-World War II history. It also, as we will see shortly, puts Martin Crutsinger, the pair member with more seniority, in disagreement with the same Martin Crutsinger who worked at AP before the turn of the century.
Looking at all GDP and unemployment rate figures since 1948, the first year when the government first reported both quarterly GDP and monthly job market reporting, I excluded the following quarters from consideration to bring the analysis in line with AP's aforementioned benchmark:
- All quarters during which the average unemployment rate, rounded to the nearest tenth of a point, was greater than 6%.
- Any quarter during which reported growth was zero or negative (i.e., obviously not healthy).
- Any quarter during the majority of which the economy was deemed by the National Bureau of Economic Research to be in recession.
- The two quarters following every recession (to filter out high growth figures during previous recoveries, though certainly not this one).
The results, depending on whether one wishes to take the AP pair's "5-6 percent" literally, or whether one includes quarters during which average unemployment was less than 5 percent (which makes more sense), are as follows:
129 quarters since 1948 have met the criteria if one looks at quarters during which average unemployment has been 6 percent or lower. Average annualized growth during those quarters has been 4.58 percent. If one only looks at quarters where average unemployment was at or between 5-6 percent, just 60 have qualified, and their average growth rate been 4.07%. Even if one only wants to look back to 1980, the results in both instances are above 3 percent by enough to make the AP's "2.5 percent or 3.0 percent" acceptability bar unacceptably low.
Back in the 1980s, when Ronald Reagan and George H.W. Bush were in the White House, anything below 3 percent was unacceptably low, either implicitly or explicitly, in Martin Crutsinger's eyes, as collectively evidenced in these excerpts:
February 20, 1987 -- "For all of 1986, the GNP (Gross National Product, since renamed Gross Domestic Product -- Ed.) grew just 2.5 percent, showing even more sluggishness than 1985, when the economy expanded at a 2.7 percent rate." (2.5 is "even more sluggish." Government data currently shows that growth in 1985 and 1986 was 4.1 percent and 3.5 percent, respectively. The unemployment rate at the end of 1986 was 6.6 percent, and would fall by almost another point during the next year.)
March 4, 1987 -- "(Manufacturers Hanover Economist) Irwin Kellner forecast that the economy ... would expand between 2 percent and 3 percent this year, matching the weak growth of the past two years." (2 percent to 3 percent is "weak"? Unemployment at the time was around 6.5 percent.)
December 21, 1989 -- "The US economy grew at a faster rate than previously estimated, the government said Wednesday, but analysts say it is fast running out of steam and some suggest it is flirting with a recession. The Commerce Department said that the gross national product, the broadest measure of economic health, grew at an annual rate of 3 percent in the July-September period, up from a 2.5 percent rate reported in October and the revision to 2.7 percent last month." (None of the three figures is specifically described as "healthy." Government data currently shows that growth in the subsequent two quarters was 0.9 percent and 4.2 percent, respectively. Unemployment during the current and then-predicted time averaged about 5.2 percent.)
This is even before getting into the previous decade, during which the Crutsinger-led AP and much of the rest of the establishment press seemed obligated to downplay any quarterly GDP result showing an annualized 2.5 percent or more by discussing whether the economy could somehow, miraculously, avoid a recession.
The above shows that the AP has, as is the case with unemployment claims (in that case raising the acceptabiliy threshold from 325,000 to 375,000), indefensibly lowered the bar. The Administration's Press moniker I have given it for some time continues to apply.
Cross-posted at BizzyBlog.com.