Economic Alarm Signals: Does Anyone Hear?

If the economy falls in America but the President, and the Congress ignore it, will The People suffer?

On Friday the Commerce Department issued a sharply downward revision of its GDP report for the first quarter of 2015.  Instead of growing at a miniscule 0.2% the economy contracted.  GDP came down 0.7%.Alarming GDP Decline

The establishment media barely noticed the economic contraction.  Obama Administration officials blew off the news as insignificant, a temporary blip due to worse than usual winter weather.  Move along, nothing to see here.   

As the next chart shows, even before the most recent quarter’s contraction we were suffering through the worst of the ten post-recession economies or “recoveries” since World War II.GDP-to-2015-Q1Revised

Hopefully, Administration spokesmen are right and the economy will resume it’s anemic pace of growth.  But, considering historic precedent they seem to be a bit overconfident.

Exactly 269 quarters have passed since the Commerce Department began tracking and reporting quarterly GDP, in 1947.

  • 225 or 85% of those quarterly reports showed positive growth or economic expansion.
  • 10 negative (economic contraction) quarters turned out to be the beginning of recessions
  • 19 negative quarters were the second, third or fourth in continuing recessions;
  • only 5 negative quarters in 66 years came and went as isolated phenomenon, not followed by a recession.  Three of those were before 1960.

So, a negative quarter is not a routine event.  A negative quarter that isn’t part of a recession is extremely unusual.  Ten out of ten recessions were signaled by the first of several negative GDP quarters.  Yet we’ve seen no sense of concern over this ominous economic indicator from the Administration or the media. 

The President has not altered his agenda in any way to head off a possible recession.  He has not eased back from his vow to “fight climate change” with sweeping new restrictions on the coal fired power plants that supply nearly half of the nation’s electricity.  The resulting spike in energy costs will function as a sweeping new penalty on American industry.  The only possible result is shrinking GDP and fewer jobs.

If the first quarter of 2015 turns out to be the beginning of a new recession – and based on history the odds favor such an outcome – the President will likely claim, as he has about each of his Administration’s crises and scandals, that he had no warning and learned about the recession from the news.  Then, he’ll blame the Republicans 

But the truth will be that his big government initiatives, including ObamaCare, the new Dodd-Frank law with it’s virtually unlimited regulatory power over banks and financial transactions, will have prevented a normal, post-recession recovery.

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