Well, this isn’t good.
Last month, when the Bureau of Economic Analysis announced that gross domestic product had grown at a lead-footed rate of 0.1 percent in the first quarter, economic analysts could focus on two pillars of hope. The first was that the winter weather was unusually awful, and first-quarter growth probably reflected that. And the second? This was a very preliminary number, and it seemed reasonable to think that it might be revised upward.
The operative word is “seemed.” Now the BEA has provided its first revision, and things only get more dismal: The economy actuallycontracted in the first quarter instead of just lying down on the sofa and feeling all mopey and sad. Key areas of decline were exports, inventories and nonresidential fixed investment. In other words, whatever happened was happening on the business side.
Megan McArdle is not yet ready to say that we’ve hit the iceberg, and that’s fair: after all, it’s not OFFICIALLY a recession until the economy contracts two quarters in a row. Then again, even if the economy does contract two quarters in a row it still may be a while before we ‘officially’ call it a recession, if you know what I mean (and I think that you do). One of Megan’s points here, though, is that the situation is sufficiently bad that the economy just doesn’t have any margin any more. Essentially, we’ve been drifting into iceberg-infest waters for some time now. Will one hit? Will we miss them all? I don’t know! Neither do you! And certainly, neither does the President!
PS: This is one reason why we like to have people with actual executive experience run for President. A governor may or may not know how to fix a problem – see pretty much every Democratic governor in America for examples – but at least he or she understands the parameters of it. In contrast, Barack Obama is still peevishly waiting for the person to come in and tell him what he has to do while the real experts fix things. At least, that’s how it’s always worked in the past.