Why All the Spin? Third Quarter GDP was 2%!

We learned today that the GDP annualized growth rate for the third quarter was revised to 2% from the initially reported 2.5%. This is not good news by any stretch of the imagination. A 2% growth rate for the economy is not enough to create the jobs required to bring down the high unemployment rate. It is not enough to raise household income. It is not enough even to raise government revenue or remove the pressure on government spending for the needy so as to reduce the deficit. Nevertheless, the spin on this number this morning was amazing in my opinion. One financial source commented that there was no reason for people to pay attention to such a "moldy" statistic. Moldy -- Huh? The third quarter ended about seven weeks ago. Most of the large companies are have been reporting their third quarter earnings in the last few weeks and more are still to come. When Hewlett Packard reported earnings for the quarter last night, did the Wall Street Journal sniff that they should be ignored as "moldy" statistics? Of course not. But it was the Journal that call the third quarter GDP number moldy.

Another financial source pointed out that the revised figures showed that the likelihood of improved growth in the fourth quarter was enhanced. Huh? None of the individual items of data they cited got any better with the revised data and two got worse. This cannot enhance the prospects for growth.

Look, I do not think there is a major difference between 2.0% and 2.5%; one needs to remember that these are annual figures, so the quarterly growth figure actually was revised down from 0.625% to 0.5%, hardly a big shift. Nevertheless, we should all remember the many proclamations of joy when the initial figure for the third quarter was announced at 2.5% a few weeks back. We were told over and over how this figure was so much higher than the 1.8-2% figure that had been expected. Well now, the original expectations have turned out to be correct. It would do a great service to the financial markets if the news media could stop spinning the results and if it would just report them instead.