The Commerce Department said Wednesday that the economy contracted at an annual rate of 0.1 percent in the fourth quarter. That's a sharp slowdown from the 3.1 percent growth rate in the July-September quarter and the first contraction since the second quarter of 2009.
Then the spin:
Economists said the surprise decrease in the nation's gross domestic product wasn't as bad as it looked. The weakness was primarily the result of one-time factors. Government spending cuts and slower inventory growth subtracted a total of 2.6 percentage points from growth.
Those volatile categories offset a 2.2 percent increase in consumer spending, up from only 1.6 percent in the previous quarter. And business spending on equipment and software rose after shrinking over the summer.
No mention at all about the big smelly elephant that stank up the room the last half of the 2012:
End the threat of Taxmageddon now. For a great many private sector companies in the US, June 30 marks either the mid-point or the end of the fiscal year. Right now they are making plans for the next fiscal year or assessing progress so far in the current one. Looming over all of that planning right now is the possibility of a return to the Clinton tax rates and hikes in income, dividend, and capital gains taxes. The implications for businesses and individuals are huge and the uncertainty around this issue will increasingly cloud business decisions the second half of the year if it is allowed to persist. I think failure to reach a resolution soon is going to drive the economy back into recession.
The thought that they are not in fact The Masters of the Universe and are instead a bunch of fuckups is too much to bear for our governmental elites(and their media lapdogs). Thus the devotion to the cult of government spending and the willful blindness to the turmoil that so many of their policies cause in the private economy. Uncertainty? "Pshaw! Why in the world would something as trivial as the whims of your betters in Washington D.C. make you scared or uncertain?"
Meanwhile, our financial elites shrug off the real carnage on Main Street as they cheer on the Fed's policy to keep the deficit party going, sure in the knowledge that the most powerful on Wall Street are not only too big to fail, but too big to jail.
The good news is that tax rates that don't sunset are now in place and despite the negative economic aspects of some tax hikes, that does provide some certainty to individuals and business. Various economists will pick and choose whatever statistics make their case today, but all of the data is tainted by the extraordinary defensive or offensive postures that were taken in the last half of 2012. As the noise from that fades we will get a better feel for the actual state of the economy.
The bad news is The Masters of the Universe are still at it. Besides the growing uncertainty as we start to find out what Obamacare and the "Financial Reform" really mean, we can be sure that the Obama administration will create more uncertainty in their approach to tax reform and EPA regulations on energy production and usage.
My guess is the economy will continue to sputter along unless, or until, one or more of the many economic time bombs out there goes off. The only sure thing is to be very bullish on "unexpectedly."
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