Another view on why there is no robust job growth
[...] there's something else that almost nobody is considering: perhaps the economic recovery just isn't as strong as Washington thinks (which, incidentally, isn't very strong to begin with.)
Nobody, of course, wants to hear this. But let me make the case.
The December estimates put into the GDP are about as solid as a Jello mold.
Worse, according to economist John Williams, 3.44 percentage points of the annualized growth in the fourth quarter -- more than the total 3.2 percent reported -- came from a sudden, inexplicable decline in imports.
Without the reduction in imports GDP would have been down in the fourth quarter and we'd be hearing talk right now -- again -- about a possible double-dip recession!
The Commerce Dept. also attributed a lot of the gain in fourth quarter GDP to retail spending.
But we already know -- from a column I did during the holiday shopping season -- that much of the sales increase in December wasn't coming from a sudden burst in consumerism, but instead from rising prices on things like energy.
That isn't growth; it is inflation. And inflation is bad.
Despite all the inflation that you and I see in the real world, the Commerce Dept. barely noticed that prices were rising in its GDP calculations.
It used 0.3 percent as the annualized deflator in the GDP report when the consumer price index (the CPI, which itself understates inflation) is up 2.6 percent from a year earlier.
Let me explain it a different way.
Each point that inflation rises decreases the GDP by a point.
So, for instance, if the GDP deflator had simply stayed at the 2.0 percent reported in the third quarter the annualized GDP growth in the final three months of the year would have been an extremely modest 1.2 percent annualized, not 3.2 percent.
Countries get them selves into trouble when they publicize false economic data, whether the deceit is intentional or not. [...]